For the first time in the past six months, the advance tax collection across the country recorded an increase over the corresponding period last fiscal. According to the figures available with the direct tax authorities, the all India advance tax collection for the April 1 to June 16 period for 2009 has gone up by 17% to over Rs 48,000 crore. The year ago figure was Rs 41,800 crore.
Out of the total collection of Rs 48,000 crore, Rs 26,000 crore came just from corporate tax. Industry sources said an increase in tax collection can be counted as a sure sign of an economic recovery in the offing.
Most companies and firms have shown healthier profit margins (10-20% higher), which has resulted in a higher tax outgo than last year, said sources.
Large corporates and banks, among others, registered higher profit margins than companies in other sectors, said sources in the income-tax department. For example, State Bank of India recorded 60% increase in its tax outgo to Rs 1,068 crore for the said quarter.
Mumbai, the commercial capital of the country, which typically accounts for 35-40% of the all India direct tax collection, too, recorded 17% increase in tax collection to Rs 19,223 crore. Corporate tax collection from Mumbai stood at Rs 12,000 crore, accounting for about 55% of the all India corporate tax collection.
Tax collected from Mumbai by way of Tax Deducted at Source (TDS) alone stood at Rs 12,600 crore, accounting for over a quarter of the all India direct tax collection.
The first installment of advance tax accounts for approximately 15% of the total tax payable for the whole year. Though, the projection for this year's tax collection will be announced in the forthcoming Budget, the I-T department has been informally gearing up for a target of Rs 4 lakh crore for this fiscal.
The 17% increase in tax collection in April-June is significant in view of the fact that during the same period last fiscal, tax collection recorded an increase of 70% over that of the previous year. This came on the back of an unprecedented business boom witnessed during this period.
However, collections began shrinking from September last, reflecting the slowdown of the economy, ultimately ending the fiscal with a shortfall in tax collection to the tune of over Rs 55,000 crore.