The slowdown in net direct tax collection has begun to hurt with figures released for April-October showing the rate of growth dipping below 30%. Net direct tax collections during the first seven months of the fiscal, up to October 2008, stood at Rs 166,905 crore, registering a growth of 29.52% as against 43% recorded during same period last year.
Fears are being expressed of a shortfall in the projected tax collection of Rs 4 lakh crore this fiscal. The budget estimate of Rs 3.65 lakh was revised upwards following booming economic trends in the beginning of this year.
However, the global meltdown also had its impact on the direct tax collection with the real estate, infrastructure, cement, automobile, power, textile and downstream oil companies facing the maximum heat. The advance tax collection from these sectors had the greatest fall. Positive growth was shown in mining, mineral, metal, engineering, Indian banking, telecom, IT, pharma and consumer goods sectors.
According to finance ministry figures released on Thursday, corporate taxes grew by 33.49% to Rs 105,174 crore from Rs 78,785 crore last year, while personal tax, including FBT, STT and BCTT, grew at 23.14% to Rs 61,433 crore.
The erosion in share values had a direct impact on revenue with the collection registering a negative growth for the first time. Continued hammering of stocks in the bourses hit the collection of Security Transaction Tax (STT) which was lowest in the last three years ever since it was introduced in 2005.