The corporate sector is betting on a better bottomline growth this year in sync with the GDP growth target of 8%. Latest advance tax pay-ment figures by the corporate sector has shown a steady growth rate of almost 30% over last year.
This would also make finance minister P Chidambaram a happy man as it would significantly shore up the revenues for the government and keep his fiscal targets within reach.
Advance corporate tax for the year, paid in four instalments, is a leading indicator of how the economy would perform. This is because companies estimate their tax liability based on projected profitability. Companies pay 30% of their annual tax liability by September 15.
Tax figures released by the finance ministry on Wednesday show the growth in collection has come about despite a steep fall in revenues from the cash-rich oil sector as most of those companies are still in the red. But keeping the receipts mounting at full steam are both manu-facturing and services sector, companies which have been showing good results.
Advance corporate tax up to September 15 has risen by 30.33% to Rs 30,898 crore. Companies paid Rs 17,273 crore as advance tax during September 06, compared with Rs 13,142 crore last year.
The Central Board of Direct Taxes spokesperson AK Sinha said the government has collected Rs 21,593 crore from advance income and corporate tax, which is 32.58% higher than the Rs 16,287 crore collected in Septem-ber 05-06. The total advance tax receipts for the year has, therefore, soared by 29.88% to Rs 37,135 crore, as per the latest figures.
Based on the buoyant advance tax receipts, net direct tax collections have recorded a growth of 37.7% to reach Rs 70,748.6 crore in April-September 15, 06-07. In the same period of last year, the total was Rs 51,378 crore. Mr Sinha said there is another silver lining to the whole revenue story. The income tax department has also succeeded in achieving 50% of the arrear recovery target of Rs 11,000 crore for the fiscal in the first five months.
For the finance ministry, trying to raise resources to meet the sharp rise in expenditure for social sector programmes, the additional sum will go a long way to keep the deficit within the tar-geted limits.
Its not just direct tax which is making the going so good on the fiscal front. Indirect tax revenues of the government have also risen by 17.2% in the first five months of the fiscal as against 12.1% in the same period in 05-06.
Total customs and excise collections stood at Rs 75,967 crore in the period under review as against Rs 64,827 crore in April-August 05-06. Service tax collection has grown by a stupendous 68.8% in April-July 06-07 to Rs 9,835 crore as compared with Rs 5,924 crore in the corresponding period of the previous fiscal.
The net tax revenue for the Centre is expected to be Rs 3,27,205 crore as per Budget estimates. The performance on the revenue collection front should be able to ease the pressure on the finance minister who has to meet the FRBM Act-mandated fiscal and revenue deficit targets of 0.3% and 0.5%, respectively.