In what seem to be signs of a downturn, income tax collection from the Nagpur region has not only been far below the target but also dropped as compared to that of previous year. Nagpur and Kanpur are two regions in the country which registered decline in direct tax collection on year-on-year basis. The overall growth in the country stands at 8%, which is again a fall as against a hike of 18% achieved in the year before.

The total tax collection in Nagpur which covers entire Vidarbha as on December 31 2011, stands at Rs1973 crore which is just 47% of the target set at Rs4134 crore. Out of this, corporation tax which is collected from limited companies has taken a major hit, as net collections stand at Rs1100 which is less than half of the target, pegged at Rs2455 crore, said a source in the department. This is mainly because of a below-than-expected collection from public sector undertakings (PSUs) - Western Coalfields Limited and Manganese Ore India Limited (MOIL), which contribute towards a chunk of the corporation tax raised from the region.

"It seems poor sales in the PSUs have trimmed their profit in turn bringing down the tax collections too," said an official involved in data compilation in the income tax department. However, the target has been missed on the personal tax front also, as only Rs877 crore could be collected as against the targeted Rs1679 crore, said the source.

The overall tax collection for the period is less by 1.13% as compared to the same period last year when the tally stood at Rs1998 crore. Kanpur, which is the other region that registered a negative growth, sees a decline of 14%. Tax mop up for the entire country has grown by 8%, at Rs2,96,882 crore.

Senior chartered accountant and chairman of Nagpur Nagarik Sahakari Bank, Rajesh Loya attributes the phenomenon to a decline in profitability in business across the board. "The mining sector too has seen a setback during the year. Even though the turnover remained same, inflation and high interest rates have taken a toll on the profits," Loya said.