Govt collects Rs 71,600 cr direct tax, says economy 'buoyant'
August, 21st 2008
The finance ministry Wednesday announced the direct tax collection between April and July this year amounted to Rs 71,648 crores, and said it was an indication of "a buoyant economy".
The assertion comes at a time when India's annual rate of inflation peaked at a 13-year high of 12.44 per cent for the week ended Aug 2.
"The total direct tax collection during April-July 2008 is Rs 71,648 crore (Rs 716.48 billion) as against an amount of Rs 48,756 crore (Rs 487.56 billion) during the last corresponding period, and translates into a robust growth rate of 46.95 per cent," the ministry said in a statement.
"The trend of direct tax collections is one of the many indicators of the health of the economy. The robust growth of direct tax collections by 47 per cent in April-July 2008 is rather an indication of a buoyant economy," it said.
As per the projection of Prime Minister Manmohan Singh's Economic Advisory Council (EAC), the Indian economy is slated to log a 7.7 per cent growth in the current fiscal against 9 per cent in 2007-08. The EAC has attributed slowdown in economic growth, among other things, to high inflation.
The total direct tax collection of India, Asia's third largest economy after China and Japan, comprises mainly advance tax payments, tax deducted at source, self-assessment tax payments, and post-assessment tax collections.
At the level of the taxpayer, advance tax payments and tax deducted at source are substitutes and inversely related to each other, that is, if the tax deducted at source (TDS) is high, a relatively smaller amount is payable as advance tax.
The ministry said that during April-July 2008, the TDS on payments received by companies increased to Rs.221.28 billion (Rs 22,128 crore) from Rs 137.82 billion (Rs 13,782 crore) in the last corresponding period.
According to the ministry's assessment, there is an increase of 60.55 per cent in the TDS as against a growth rate of 43 per cent during the same period in the last fiscal.
"This unprecedented increase in TDS collections is reflected in relatively lower growth rate of 24 per cent in advance tax payments as against a growth rate of 28 per cent during the same period in the fiscal year 2007-08. This trend is consistent with past experience," the ministry said.