The Congress-led government is banking on 8.5 per cent economic growth for a surge in tax collections by about 20-25 per cent over budget estimates.
Finance minister P. Chidambaram expects the growth to occur despite rising crude and commodity prices. Every estimate says that the economy will still grow at 8.5 per cent, he said.
Chidambaram asked tax collectors to raise the target of direct tax collections by 25 per cent from Rs 3, 65,000 crore estimated in the budget for 2008-09.
The economy had expanded by 9 per cent in 2007-08 and 9.4 per cent the year before. A global commodity price surge and a tight money policy adopted by the Reserve Bank of India to check rising prices at home have seen growth rates tapering off.
However, the government believes a growing economy and better data mining may enable the tax collectors, who met here today for an annual conclave, to increase collections.
Given the actual collection during 2007-08 at Rs 3,14,468 crore, I have asked the CBDT (Central Board of Direct Taxes) to quickly revise upwards the (budget) estimate. The estimate will no longer be Rs 3, 65,000 crore. The CBDT will meet over the next couple of days and increase the estimate upwards, Chidambaram said after the annual conference of the chief commissioners of income tax in Vigyan Bhawan here.
He said the estimates for the collection of tax should be raised 25 per cent. This would, if accepted by the tax officers, mean that the government would be able to gather Rs 3,92,000 crore as direct tax.
Chidambaram warned of prosecution if anyone has not filed returns for the last three years. Fifteen such cases have been identified, he added. In a search, seizure or survey if we find someone has stopped filing tax returns in the last three years or has not filed returns during this period, we would immediately start prosecution, he said.
The increased collections could help the government meet its various commitments higher subsidies on food and fertilisers, more oil bonds and the Rs 71,000-crore loan waiver to farmers.