The countrys direct tax regime has set a target of Rs 4,00,000 crore for the current fiscal year (FY10), just Rs 5,000 crore more than the revised target of Rs 3,95,000 for the previous year.
However, there is a Rs 62,000 crore difference between the proposed target for the current fiscal and actual collection in the previous fiscal. The realised collection last fiscal was Rs 3,38,000 crore. Though the official projection for direct taxes will be formally announced in the forthcoming budget, a senior official of the revenue department, who briefed direct tax officials on Wednesday, said the Income-Tax department should strive to achieve this target.
All India direct tax collections last fiscal fell short by Rs 27,000 crore, despite a concerted effort on the part of the I-T department to meet the original target of Rs 3,65,000 crore. Incidentally, the original target was revised in June 2008 to Rs 3,95,000 crore, following an unprecedented growth in collection, to the tune of over 71%.
The opinion now gaining ground in the finance ministry is that its target should be in tune with the ground realities, i.e., a target that would take into account the impact of a slowing economy on corporate margins and the tax outgo. Therefore, the mood of the tax officials in the beginning of the FY10 is of utmost caution.
This is in total contrast to the upbeat mood that prevailed during the first two months of the FY09 that witnessed a 71% growth.
But senior tax officials say much will depend on the performance of the economy in the coming months. The previous fiscals collection was around 8% higher than FY08s collection of Rs 3,14,000 crore. The proposed projection for the current fiscal envisages about 18% increase.
According to the departments own admission, only a few sectors, such as pharma and banking, remain unaffected by the slowdown.