Governments cash registers have been ringing non-stop since the beginning of the current financial year. While the budget estimated a growth rate of 19% in revenue collection -- considered a tall order -- during April-June 2006, actual collection has witnessed a 32% surge, helping the government to cushion the steep 40% rise in its expenses during the first three months of the current fiscal.
Gross tax collection during April-June 06-07 stood at Rs.69,080 crore as against Rs 52,283 crore in the first quarter last fiscal. The growth story has continued in the subsequent period also, indicating that India Inc was on a roll and the economy continues to remain buoyant.
The budgetary estimate on direct tax front is Rs 2,10,419 crore for the fiscal. For customs, the budgetary estimate is pegged at Rs 77,066 crore while for excise duty it is at Rs 1,19,000 crore in the fiscal. The going has been extremely good for the governments tax collecefforts during the initial period of the second quarter too.
On the direct tax side, corporate tax mop up saw a 85.5% rise in April-July 06 at Rs.19,553 crore. Income tax collections -- including fringe benefit, banking cash and securities transaction taxes -- grossed Rs.16,528 crore against Rs.11,823 crore, witnessing a jump of around 30%. Government could gross Rs.10,000 crore from FBT, BCTT and STT during 06-07, tax experts say on the basis of current indications. The government has collected Rs.2,563 crore from these taxes during the first four months of 06-07.
With both oil and non-oil imports growing by 29%, government collected 35% more as customs duty at Rs 26,692 crore in April-July, 2006-07. Excise duty collections also increased by 7.8% during the first four months of the current fiscal to Rs 32,754 crore as against Rs 30,387 crore in the same period in 2005-06. The growth rate is far higher than the 6.25% budgeted for the current fiscal.
On the service tax front, collections in the first quarter increased by 63.4% to Rs 7,173 crore as against Rs 4,390 crore in April-June, 2005-06. According to Sandip Chaufla of KPMG, the possible reason for good collection figures in the first quarter could be the upswing in the economy." If the expected taxable profits are more, advance taxes are also higher. Also, for the recovery of demands raised in March 2006 the department normally gives a 30-day period for payment. So the recoveries come in April-June quarter. Also, stringent measures have been taken by department to collect," he said. However, the growth rates are expected to temper down with refunds coming up on account of settlement of appeals.
According to sources in the finance ministry, trends for the month of August are showing a moderate decline. September would be a crucial month, revealing the actual trend in terms of growth in collections. But, since the overall economy looks good the collections despite any decline should be able to meet the targets unless there is a drastic economic downturn. ...ends.