Banking on healthy growth in direct taxes collections, finance minister Pranab Mukherjee raised the target for financial year by Rs 20,000 crore to Rs 4.5 lakh crore after a one and half hour long video conference with the chief commissioners of income tax.

Mr Mukherjee is counting on the tax bouyancy to meet additional expenditure on subsidy beucase of the rising commodity prices, helping him stay within the fiscal deficit target of 5.5 % of GDP.

Finance minister has raised the target as tax collections are buoyant, said a income tax department official.

Indirect taxes target is also likely to be revised in keeping with the over 45% growth in collections in the first April-November 2010 from a year ago.

In a break from the tradition, kicking off budget consultation in earnest, Mr Mukherjee held consultation with 48 chief commissioners and director generals of income tax from the room of chairman, Central Board of Direct Taxes . Mukherjee unveiled the vision 2020 for the department and asked officials focus their energies to raise collections, in the current year and also over a longer term. Direct tax collections have grown at 19% in the first nine months of the current fiscal, the required rate for the budget target of Rs 4.5 lakh crore.

Corporate tax collections grew 21.3% and personal income tax rose by 16.2% in April-December 2010 with the total direct tax collections crossing the psychological mark of Rs 3,00,000 crore.

Gross tax collections in April-November 2010 are up 27.4% from a year ago against budget target of 18%.

The higher tax collections will come handy as the governments subsidy bill is expected to cross the budget estimates following a spike in global commodity prices.

The fertiliser ministry has projected a revised demand of Rs 82,245 crore as against the budgeted Rs 52,837 crore, citing hardening international prices of key inputs and imported fertilisers.

The petroleum ministry could also seek extra funds to compensate oil companies for higher losses incurred in selling fuel at below cost as global crude prices have risen to over $90 a barrel.

The same is the case with food subsidy bill with the food ministry saying the it needs Rs 25,000 crore more than budgeted Rs 55,000 crore.

The finance ministry had budgeted Rs 3,108 crore towards petroleum subsidy, but provided another Rs 14,000 crore in the first supplementary demand.