Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TDS :: cpt :: ACCOUNTING STANDARDS :: VAT RATES :: VAT Audit :: articles on VAT and GST in India :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARD :: list of goods taxed at 4% :: empanelment :: ARTICLES ON INPUT TAX CREDIT IN VAT
« News Headlines »
 I-T Department may go into overdrive this quarter
 Ways to reduce the TDS deduction from your salary
 4 Tips for choosing who prepares your 2017 Tax Returns
 Processing of income-tax returns under section 143(1) of the Income-tax Act which were filed in Forms ITR-1 to 6 & applicability of section 143(1)(a)(vi)
 Price Waterhouse gets 2-year ban in Satyam case
 How to save income tax under section 80C
 These four expenditures can help you save tax under section 80C
 How to avoid excess deduction of TDS from salary income
 Income-tax deduction from salaries during the financial year 2017-18 under section 192 of the Income-tax Act, 1961
 Comparison of 10 tax-saving investments under Section 80C
 10 Income Tax-Saving Options Beyond Section 80C Limit

Will slowdown impact tax collections?
March, 23rd 2009

While the tax collection figures indicate a negative impact of global crisis on the overall fiscal situation, the moot point is how grim is Indias position vis--vis other economies. Tax collections during the UPA regime point towards an accelerated and unprecedented growth. However, the regime shall also witness deteriorating finances with an unexpected bubble squeeze.

Tax collections so far are pointing towards government missing on the gross tax revenue target for the first time in several years primarily due to continuous decline in excise, custom and advance tax payments. Contrary to this, service tax collections have grown, though at a slower than anticipated rate. This is bound to challenge the governments ability to meet the revised gross tax revenue target of Rs 6,279 billion for fiscal 2009.

All eyes are now on the direct tax collections in the last 10 days of the year.

Finance Ministry officials are optimistic and believe that the collections are expected to improve due to TDS collections and March 15 Advance tax deadline defaulters who would make it up by end of this fiscal. Direct tax collections for the first 11 months have been 76.37 per cent of the total estimate. Statutory provisions coupled with practical experience suggest that corporates and non-corporates pay 25-40 per cent, respectively of their tax liability in last week of March.

Advance tax figures are clearly suggestive of the trend that most Indian companies expect lower profits due to the impact of slowdown. Sector wide differences are an indication of the severity of the crisis impacting different segments of the economy. Banking, insurance and consumer product companies have emerged clear leaders and are the highest contributors to the exchequer.

Regarding indirect tax collections, the target was revised down, initially to fight inflation and boost demand. There has been a 6 per cent decline in excise collections, customs duty has increased 1 per cent (as against 3.7 per cent) and service tax collections rose 22 per cent (as against 27 per cent). It is unrealistic to expect the gap to be bridged by the end of the fiscal.

Money expended by government on populist schemes, farmer loan waiver and sixth pay commission has strained fiscal correction targets pushing the revenue deficit to 4.4 per cent as against an estimated 1 per cent. The toll of the meltdown is (re)shaping global economies in different ways. India seems to be better placed than other economies that have been experiencing sharp decline in tax collections and an even worsening fiscal deficit.

The impact of meltdown on tax collections can be measured using a correlation analysis between GDP growth, fiscal deficit and tax collection trends. Indian economy grew at 5.3 per cent in the third quarter of 2008 compared to 7.8 per cent growth in the first half, suggesting that higher GDP growth rates can control fiscal deficit, at a given level of government expenditure. Our challenge would be to achieve moderate growth rates with low fiscal deficit in the next fiscal. Having said that, the higher base effect of tax revenues seems to be a good cushion. Further, with demand boost, the Indirect tax rates for excise and service tax would be pushed up, either by later part of 2009-2010 or in 2010-2011.

Indias unique composition of growth contributors cyclical fluctuations can be evaluated as impact on sectoral composition of the economy. Agriculture will continue to drag the fiscal situation in years ahead unless serious reforms are pursued. Its time the government realises the growth potential of food, agro and allied sectors which comes within the taxation net.

The industrial segment on the other hand has experienced a steady growth rate barring last 2 quarters. However, the worrying factor continues to be short term deceleration which would adversely impact tax collections. The services sector is probably the saving grace. We, however, ought to wait and watch the impact on tax collections given a shift from 3 years of double digit growth.

In conclusion, the need for accelerated pace of tax reforms was never felt as much as in the present downturn. Though indirect tax breaks will boost demand in the short term, only deeper reforms will aid improved compliance and push tax collections in the medium to long term.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Development Software Programming Software Engineering Custom Software Development Requirement Based Software Development Software Solutions Software Serv

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions