The corporate tax collections are expected to emerge as the largest contributor to the Central governments tax kitty for the first time, overtaking excise duty collections, according to Assocham.
The latest issue of Eco Pulse study by the industry body estimates that corporate taxes are likely to contribute 31% to the total tax revenues touching Rs 1,00,000 crore mark for the current fiscal.
This is expected to be a bigger revenue generator compared to the Union excise duty collection, which is estimated at Rs 94,000 crore or about 28% of the tax collections during FY07.
The projections have factored in the growing buoyancy in the economy and the performance in the corporate sector. According to the study, during 2005-06, the net corporate tax collections stood at Rs 77,483 crore as against excise duty collections of Rs 87,416 crore.
Over the last few years the share of net excise duty in total tax revenues has been declining on an annual basis by about 2.5% while that of corporate tax has been increasing by about 2%.
According to Assocham president Anil Agarwal: The excise duty collections have been very slow, registering a sluggish growth in the last two quarters. The improvements in the corporate tax collections can be attributed to the robust macro-economic growth.
Further the reduction in corporate tax rates have resulted in significant increase in corporate tax collections as a percentage of GDP contributing roughly 2.67% in 2004-05 as against the level of 1.87% in 2002-03.