Net direct tax collections for this fiscal till February have shown some buoyancy, reflecting the “cautious optimism” in certain quarters about the economy being on the mend.
To some extent, the latest data are an endorsement of the Economic Survey’s reading that the economy is on a recovery path.
The overall net direct tax collections grew a robust 6.96 per cent in April-February 2015 to ?5.07-lakh crore (?4.74-lakh crore). This was higher than the little over 6 per cent growth level seen till January this fiscal.
However, the Centre may have to do some heavy lifting in March to meet the revised estimates for direct tax collections for 2014-15.
Much would depend on the upcoming March 15 advance tax instalment, which, as in the previous years, will be crucial, say economy watchers.
“The advance tax payout by corporates is expected to be better in the March 15 instalment given the interest rate cut by the RBI in January,” Partho Dasgupta, Partner-Direct Taxes, BDO India LLP, told BusinessLine.
G Ramaswamy, former CA Institute President, said the economy was definitely looking up in the last three-four months. Advance tax payout in March is expected to be higher from both corporates and high net worth individuals, he said.
Things are looking encouraging if one goes by the 10.67 per cent increase in gross tax collections until February this fiscal at ?6.12-lakh crore (?5.53-lakh crore).
However, achieving 16 per cent growth in direct tax collections as envisaged in the Budget Estimate for 2014-15 would be “challenging” given that collections rose by 10.67 per cent in first 11 months, Aseem Chawla, Partner, MPC Legal, a law firm, said.
The latest Budget’s proposal to revise downwards the direct tax collection targets was a “practical initiative”, he said.