Early trends of the direct tax collections for the last quarter of this fiscal (January-March) indicate that the government is likely to mop up an all-time high of anything above Rs 1.20 lakh crore.
As compared to net direct tax collection of Rs 1,05,088 crore in the entire 2003-04 fiscal, this is no mean achievement, considering that the economy has just recovered from a downturn and the fact that till the September quarter of 2009, the growth in tax collection was less than 4%. The January-March 2010 collection, as anticipated, would post a growth of nearly 20%.
The Central Board of Direct Taxes (CBDT) has put added emphasis on more number of scrutiny in the current fiscal so that some loss on account of indirect taxes is offset through additional direct tax mop-up. A senior CBDT official, however, said the finance minister's revised target of Rs 4 lakh crore for this fiscal is still beyond reach.
Apart from the regular assessment, the mop-up through scrutiny is likely to be upwards of Rs 25,000 crore. Every year, the income tax department raises additional demands during scrutiny after reverification of returns. Last year, the government had collected around Rs 30,000 crore from a similar exercise.
The tax base has increased over the years resulting in a buoyant collection. Till the downturn hit India in 2008, the tax collection was growing at an average of 27%.
However, it slowed down to single digit in 2009. Still the larger tax base led to an increase in collection from Rs 1,05,088 crore in 2003-04 to Rs 3,38,212 crore in 2008-09 taking up the share of direct taxes collection in the GDP from 4% to 6%.
The government has taken a number of measures to further expand the tax base, including facilities of electronic payment of taxes. Last year, nearly one-sixth of the total tax returns were filed electronically, while nearly two-thirds of the gross taxes were paid electronically.
A centralised processing centre has become operational at Bangalore and is likely to further speed up processing of returns and issue of refunds to taxpayers. The Refund Banker Scheme at present functional in six cities ensures that taxpayers get their refunds quickly and directly into their bank accounts.