Finance Minister P Chidambaram said direct tax targets will be revised sharply upwards. The direct tax budgetary estimate was at Rs 3,65,000 crore. FM is confident that the direct tax collections will exceed targets and economy will grow over 8% this fiscal.
FM has also asked Central Board of Direct Taxes, or CBDT to sharply up the FY09 direct tax target. He also informed that the new income tax code is ready and the discussion paper is being written.
Finance Minister P Chidambaram's indirect tax revenue projections have been hit thanks to fighting inflation and doling out a bailout package for oil companies. But Chidambaram claims direct tax collections will make up for the loss in revenue. Chidambaram expects a 25% increase in direct taxes this fiscal.
The Finance Minister is hoping that the Central Board of Direct Taxes will collect around Rs 4 lakh crore this fiscal, a 25% increase over last year's direct tax collections. Chidambaram hopes this will make up for the loss in revenues on account of the recently announced oil package, and cuts in customs and excise duties, which works out to about Rs 30,000 crore.
The FM's confidence stems from the fact that direct tax collections had surged by about 36% last fiscal to take the total collections to a shade over Rs 3,14,000 crore, on the back of a 9% growth in 2007-08. But with a slowing economy, the FM is not willing to take any chances. So, he is asking the tax department to tighten compliance.
The tax net is expected to be widened; 2,73,00,000 assesses filed returns last year. This year the figure is expected to go up to 3 crores. The ambit of the Annual Information Return will also be expanded
The FM is also taking the compliance battle to the Railways and the Defence Ministry. Though both have generated substantial TDS collections, yet commensurate returns have not been filed. The FM will now take up the matter with these both ministries. And here's the warning- get ready to be prosecuted if you have stopped filing returns or havent filed returns at all.
There are stop filers and non filers. We will identify them and if caught they will invite prosecution. There are 15 cases pending with us, said Chidambaram.
But the FMs direct tax projections could go awry if crude and inflation continue to rule high and interest rates harden further. For now, Chidambaram is confident of tiding over the current fiscal crunch.