In what could be an indication of the economy clawing back, the governments direct tax collections rose 17% in May 2009 to Rs 11,919 crore, shrugging off the past downhill trend.
The growth in tax collections comes on the back of six core industries, together clocking the fastest growth rate in 10 months. Power, crude oil, refinery products, coal, cement and finished steel grew 4.3% year-on-year, recovering from a low of 1.1% in December 2008, raising hopes that the green shoots in India, as indicated by RBI governor D Subbarao, may sprout the fastest. He had recently said while the Indian economys turnaround was linked to a global revival, the countrys recovery would be swifter and sharper.
The rebound in tax collections has come after a decline of 3.19% in April to Rs 12,239 crore against Rs 12,642 crore a year ago. In fact, collections in the last two months of the previous financial year (February and March) were also subdued. While tax collections grew a modest 0.92% in March, it declined by a whopping 18.6% in February.
A official in the income tax department said tax collections were looking up, but said a conclusive trend could be drawn only after advance tax payments in June. A consistent positive trend in June would give government some succour as it prepares to present a full Budget in July.
In the first two months of the current fiscal, corporate tax collections increased 5.56% to Rs 8,578 crore from Rs 8,126 crore while personal income tax, including fringe benefit tax (FBT) and securities transaction tax (STT) grew at 5.92% to Rs 15,559 crore against Rs 14,690 crore in the corresponding period a year ago.
STT collection, however, did not reflect the buoyancy of the stock markets and declined 24.75% to Rs 795 crore in the period under review compared with Rs 1,057 crore a year ago. FBT, declined 5.57 % to Rs 103 crore against Rs 109 crore in April-May last year.
The governments direct tax kitty missed the revised Budget target of Rs 3.45 lakh crore for 2008-09 by Rs 6,000 crore. It has projected the direct tax kitty to grow to Rs 3.79 lakh crore this fiscal in the interim Budget.
An official statement from the Central Board of Direct Taxes (CBDT) said the refund outgo during the two-month period had also improved with refunds to non-corporate tax payers growing at 61.7% at Rs 2,149 crore compared with Rs 1,329 crore in the same period last year. The growth in refunds was due to faster processing of returns on the new national computer network, the statement added.
Corporate tax collection in April-May increased 5.56% to Rs 8,578 crore from Rs 8,126 crore while personal income tax, including FBT and STT grew at 5.92% to Rs 15,559 crore against Rs 14,690 crore in the corresponding period a year ago.