The finance ministry is riding high on the expectations of tax collections surpassing budget estimate in the current financial year.

Leaving behind apprehensions of a rise in interest rates and petro duty cut impacting budget numbers, the officials are now confident of keeping the fiscal deficit within the targeted 4.6 per cent of the gross domestic product (GDP). A senior finance ministry official told Business Standard that going by the current trend in the tax collections on both direct and the indirect tax side, total tax collection was set to cross the budget target despite over Rs 37,000 crore revenue loss due to the duty reduction on petroleum products.

The official pointed out that the overall situation had become quite comfortable because of the good tax collection in the first quarter.

He, however, added that a clear picture would emerge after the payment of second instalment of advance tax by September 15.

In the meantime, Finance Minister Pranab Mukherjee has already raised the tax collection targets for both direct and indirect taxes by 10 per cent for the two states he has visited recently Tamil Nadu and West Bengal.

This exercise is set to continue and the Budget Estimate for tax collection is also likely to be raised subsequently on the back of good first quarter (April-June) collections.

The official said there were still some apprehensions on some segment of the industry getting affected due to high interest rates and slowing of demand but with new tax growth centres emerging, they would take care of any shortfall in other areas.

Direct tax collections in the first quarter of this year have witnessed good growth in number of smaller cities showing extension of tax base and increased business activity in these centres.

Net indirect tax receipts in the first quarter this year recorded 32 per cent increase to Rs 76,499 crore, while gross direct tax collections rose about 23 per cent to Rs 1,03,000 crore.

The Budget Estimate for indirect tax collections this year is Rs 3,92,908 crore an increase of 15 per cent over the last year. In the case of direct tax mop-up, it is Rs 5,32,651 crore 19 per cent higher than 2010-11.

After devolution to states, the net tax to the Centre in 2011-12 is estimated to be Rs 6,64,457 crore.

The non-tax revenue receipts are estimated at Rs 1,25,435 crore. The total expenditure proposed for the year is Rs 12,57,729 crore.

The higher-than-expected revenue from 3G auctions had helped in bringing down the fiscal deficit from 5.5 per cent to 5.1 per cent of GDP for 2010-11. For 2011-12, it is kept at 4.6 per cent of GDP, which improves upon the earlier target for 2011-12 indicated in the fiscal road map presented in 2010-11 budget.