Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: VAT Audit :: list of goods taxed at 4% :: form 3cd :: Central Excise rule to resale the machines to a new company :: TDS :: cpt :: TAX RATES - GOODS TAXABLE @ 4% :: VAT RATES :: due date for vat payment :: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment :: ACCOUNTING STANDARD
 
 
« Direct Tax »
 FinMin may review tax regime on long-term capital gains
 Income tax return: TDS refund on capital gains invested needs to be instant
 CBDT holds circular on indirect tax provisions
 CBDT puts on hold circular on taxation of indirect transfer of shares
 CBDT prods officials to meet tax collection targets
 Budget 2017: Direct tax reforms to be gradual than radical, says KPMG
  FM Arun Jaitley may drop tough tax accounting rules
 FM Arun Jaitley may drop tough tax accounting rules
 How to view your TDS through form 26AS?
 Deduction of tax at source Income-tax deduction from salaries under section 192 of the Income-tax Act, 1961
 Banks must furnish information on accounts that have seen deposits over 2.5 lakh: CBDT

FM will have to rely heavily on direct taxes
June, 02nd 2009

Direct tax collections in India had been growing by more than 25% a year since the financial year 2003-04 with Rs 3.12 lakh crore collected in 2007-08, against collection of just over Rs 1 lakh crore in 03-04. This trend of healthy growth continued up to September 2008 as collections stood at Rs 1.54 lakh crore, up 33%. The adverse effects of global economic slowdown on Indias economy became obvious from October 2008 onwards, leading to a fall in collections. During the next six months (October 2008 to March 2009), advance-tax and self-assessment tax collections fell more than 20%, resulting in overall negative growth of 6.6%.

The fall could be restricted to 6.6% due to positive growth of 6.7% in post-assessment tax collections and of 24.6% in TDS payments. As a result, direct-tax collections for year to March 2009 stood at Rs 3.38 lakh crore, growing at 8.33% whereas indirect tax collections fell by 4.13%. This was partly due to 50% more tax payments made by the banks whereas almost all other sectors had shown negative growth. The success achieved in augmenting TDS collections from government departments, PSUs and from TDS surveys conducted in very large numbers all over the country also contributed significantly to this growth. In addition, more than Rs 26,400 crore were collected out of demand raised in assessments.

The comparative study of growth trends in direct-tax collections and indirect-tax collections makes a very interesting reading. Direct taxGDP ratio had grown from 3.81% in 03-04 to 6.61% in 07-08. This ratio went down only marginally to 6.36% in 2008-09. On the other hand, indirect taxGDP ratio has by and large remained the same, being at 5.39% in 03-04, 5.92% in 07-08 and down to 5.04% in 08-09. The share of direct taxes in total tax collections has also gone up from 36% in 01-02 to 55.8% in 08-09. Therefore, the finance minister will have to rely heavily on direct-taxes to finance the development schemes of the government.

The revival of the economy is expected only by the year-end. The slow GDP growth at present would adversely impact the advance-tax/ self-assessment tax collections. While incomes are likely to go down, the economic activities, including work on various projects and contracts, especially those funded by the government, national /international agencies and MNCs, will go on. Therefore, the I-T department would probably deploy its manpower and resources on augmentation of TDS. The computerised data can be used for generating lists of short-deductors, non-deductors and payment-defaulters. It should be possible to achieve more than 30% growth in TDS collections.

Interestingly, the percentage of post-assessment tax collections out of total tax collections has remained the highest in India, varying between 15% and 9% as compared to less than 8% in any other country (source: OECD data). This is the position even though only less than 2% of tax returns are being scrutinised in India. It would be advisable for the department to concentrate on raising substantial demands by framing quality assessments and thereafter on collecting such tax demands. The planned use of computerised data can facilitate detection, especially of cases making inadmissible claims of exemptions and deductions.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Achievements

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions