The direct tax collection for the current fiscal is likely to fall short of the Budget Estimate by around Rs 20,000 crore, a Central Board of Direct Taxes (CBDT) official told The Indian Express.
The shortfall is imminent because the economys outlook has worsened and the first indications are visible in the dismal performance of the advance tax collection in the third quarter of 2011-12. By the end of the third quarter, corporates would have paid 75 per cent of the full years advance tax.
In the third quarter, when India Inc pays 30 per cent of their estimated total tax liability, collections from the top 100 companies actually declined 1.4 per cent compared with the advance tax mop-up in the previous year.
Advance tax collection from the countrys top 100 companies stood at Rs 30,763 crore in the third quarter this year as against Rs 31,203 crore paid in the same period last year.
The decline in the advance tax collection was not surprising since the industrial output decelerated 5.1 per cent in October.
Large corporates preferred to sit on cash rather than invest in projects, presenting a bleak future for growth in the last quarter of 2011-12.
Given the fact that the corporation tax accounts for almost 67 per cent of the total direct tax kitty, any decline in it has a significant bearing on the total revenue collection.
The officials also said the revenue department has been very prompt in making refunds this year. In the first eight months, total tax refunds were a staggering Rs 68,669 crore, almost double the refunds of Rs 37,640 crore during the same period of the previous year.