Slowdown hits tax kitty by Rs 60,000 cr this fiscal
February, 17th 2009
Hit hard by the economic slowdown, the Centre's tax kitty is slated to have a shortfall of about Rs 60,000 crore this fiscal against original estimates, with indirect taxes being impacted more as the Government cut these duties to perk up the economy.
The interim budget, presented by Finance Minister Pranab Mukherjee in Parliament, today pegged the gross tax revenue collections at Rs 6,27,949 crore, lower than the Rs 6,87,715 crore estimated earlier.
Also the government has targeted tax collections for 2009-10 lower at Rs 6,71,293 crore compared to the original targets for the current fiscal despite the interim budget refraining from altering any tax rates.
The collections this fiscal are slated to be lower for both direct and indirect taxes, with the interim budget estimates indicating that at least two-thirds of the shortfall of Rs 60,000 crore are accounted for by indirect taxes.
The lower indirect tax collection is mainly due to tax cuts of Rs 40,000 crore, including the across-the-board four per cent reduction in central excise rates in December 2008 as part of the first stimulus package.
Hit by the slowdown in the economy, the indirect tax kitty is slated to be about Rs 40,000 crore lower at Rs 2,81,359 crore as compared to Rs 3,21,264 crore estimated a year ago.
Mukherjee said that the shortfall was primarily on account of the fiscal measures initiated by the government to counter the impact of the global slowdown on the Indian economy.
Besides, income tax collection has been pegged Rs 15,714 crore lower at Rs 1,22,600 crore as compared to the earlier estimated Rs 1,38,314 crore.
Corporate tax will also be lower at Rs 2,22,000 crore this fiscal against Rs 2,26,361 crore estimated earlier while presenting the previous budget.
Against all claims of the tax authorities, even direct tax collections would be lower by about Rs 20,000 crore than the original estimates of about Rs 3,65,000 crore.
This is when the income tax department had raised its target to Rs 3,95,000 crore, encouraged by good collections in the first two months of this fiscal.