Riding on a buoyant economy and better tax compliance, gross tax revenue collections are likely to surpass the Rs 6,00,000 crore mark in 2007-08. In other words, tax revenue is expected to double compared with Rs 3,04,958 crore in 2004-05.
We expect tax revenue collection to exceed Rs 6,00,000 crore by end-March, a senior finance ministry official said.
If the collections surpass Rs 6,00,000 crore, the gross tax to GDP ratio will go up to around 13 per cent in 2007-08, compared with Budget estimate of 11.8 per cent and medium term target of 12.7 per cent by 2009-10.
Budget estimate for tax revenue is Rs 5,48,122 crore in the current fiscal year compared to Rs 4,72,328 crore in 2006-07, an increase of over 16 per cent.
Much of the credit for the higher tax revenue goes to surge in personal income tax, corporation tax and service tax collections in the last three years. Current years tax collection trends indicate that except excise duty, all other direct and indirect taxes are likely to meet and exceed Budget estimates.
Direct tax is going to contribute over 50 per cent to the tax revenue in 2007-08 and overtake indirect taxes for the first time. It is expected that direct tax revenue will exceed budget estimate of Rs 2,67,490 crore by Rs 40,000 crore to 50,000 crore in 2007-08.
Indirect tax collections are likely to be around the Budget estimate of Rs 2,78,013 crore, thanks to customs and service tax collections, which are likely to take care of any shortfall in excise duty.
Besides improving government finances, the higher tax revenue collection will give it a cushion to give a little more tax benefit to income tax payers to sustain the revenue buoyancy.