The countrys top contributor of income tax has seen a sedate growth in tax collections so far this financial year. The citys income tax collection has risen 6.7% till March 12, trailing other cities such as Delhi, Hyderabad and Kolkata, which have seen a growth in excess of 25% on an average.
With a collection figure of nearly Rs 96,000 crore, tax officials admit that Mumbai is likely to miss its revised target of Rs 1,33, 000 crore, which was brought down from Rs 1,50,000 crore earlier.
Experts say the slump in the stock market, and the high base are the key reasons for the decline in collection.
In contrast, some smaller cities like Bhubaneshwar, Kochi and Nagpur have witnessed close to 30% growth, while others like Meerut, Jaipur and Guwahati have seen decline of 9.1%, 1.6% and 16.4% respectively in collections as compared to previous year.
The government had budgeted for direct tax collections of Rs 3,65,000 crore at the start of the financial year. This was raised to Rs 3,95,000 crore after the first two months of the fiscal witnessed an unprecedented growth of 70 % in tax collections.
However, the figured had to be revised back to Rs 3,65,000 crore during the course of the year, as the effects of the slowing economy began to be felt across sections of tax payers. Tax collections started slowing from October, mirroring the downturn in the economy.
According to officials, who did not want to be named, the income-tax department is trying hard to increase tax collections from Mumbai, which accounts for 35-40% of national direct tax collection.
Delhi, which is the second-highest tax collection centre, mopped up Rs 47,198 crore by way of income tax, up 27% over the same period last year. Similarly, Hyderabad, Kolkata and Chennai have recorded a growth of 26%, 23% and 17% rise respectively.
According to I-T officials, the target for securities transaction tax (STT) has been lowered from Rs 9,704 crore to Rs 6,704 crore. Till March 12, mop up by way of STT was Rs 5,400 crore as compared to last years collection of Rs 8,966 crore.
The department has seen a shortfall in the collection of TDS. To make good the shortfall, the department has carried out surveys to identify corporates that have collected TDS but defaulted in remitting it to the government.
Income-tax officials said that some of the defaulting companies have paid up. The department has also identified corporates that have defaulted in TDS payable in cross-border transactions. A third of Mumbais tax collection is expected to be collected by way of TDS.
Any shortfall in direct tax collections could further worsen the fiscal deficit now pegged at 6% of GDP for the financial year and force the government to borrow more from the market.
The government has already been forced to revise the fiscal deficit target upwards from its initial projection of 2.5%.