Direct tax collections in the period April to November this fiscal grew by just 2.4% but the revenue department is now hoping to improve upon this given the better-than-expected growth in gross domestic product or GDP during the quarter to September 2009.
Officials say they consider even the small growth in collections as significant, largely because the comparison was with the year ago tax collection, figures which were achieved at a time when economic growth was high. During the year ago period (April to November) tax collections recorded a y-o-y growth of 21%. Tax officials say that the rebound in growth especially in manufacturing should be reflected in the tax pay out by corporates and other assesses.
The government collects direct tax in four installments on June 15, September 15, December 15 and March 15. By December, assessees pay 75% of the total advance tax for the year. The optimism of the tax authorities stems from the fact that last years trend of declining collections started off with the third installment of advance tax payment due on December 15 and continued till the end of the fiscal, resulting in a total shortfall of about Rs 60,000 crore against the original target of Rs 3,95,000 crore.
The 70% growth in collection witnessed during April-June 2008 declined to less than 11% by December 2008. The collection during April-December 2008 period was Rs 2,30,000 crore. The government has projected a collection of Rs 4,00,000 crore under the direct taxes head which includes mainly corporate tax and personal tax.
The robust GDP growth numbers for the quarter to September end this year dispels fears of a repeat of the negative trend seen last December The Income-tax departments internal reports on corporate margins are compelling reasons for the government to expect at least a 10 to 15% increase in collections by December 15.
Total collection, including corporate and individual taxes, until November 30 was Rs 1,84,353.5 crore. The corresponding figure last fiscal was Rs 80,114.9 crore. Out of this, corporate taxes accounted for Rs 1,15,570 crore, a y-o-y increase of 3.5 %. Collections from the Securities Transactions Tax (STT) registered a growth of close to 17% at - Rs 4,859 crore over the year ago period.
Though a major part of advance tax collections are paid within two days of the due date, taxes in the form of self assessment tax, Tax Deducted at Source (TDS), Securities Transactions Tax (STT) and Wealth Tax are paid much before the due date for advance tax payment.
Though a major part of advance tax collections are paid within two days of the due date, taxes in the form of self assessment tax, Tax Deducted at Source (TDS), Securities Transactions Tax (STT) and Wealth Tax are paid much before the due date for advance tax payment. TDS is paid within one month of deduction while STT is paid as and when the transaction took place.