Net direct tax collections up 42 % in April-August
September, 07th 2007
Aided by an increase in tax deductions at source-based collections, buoyant economic growth and improved compliance, the Centres net direct tax collections grew 42 per cent in April-August 2007 to Rs 61,030 crore as compared to collections of Rs 42,980 crore recorded in the same period last year.
Official sources said that TDS collections grew 47 per cent on a year on year basis for the period under review and that there were signs of a reversal in the declining trend of the contribution of TDS to the overall direct tax kitty.
The declining trend in TDS, seen in recent years, seems to be reversing during the current fiscal, said a revenue department official. In 2005-06, TDS accounted for 28 per cent of the direct tax collectio ns, lower than the 30 per cent level in the previous year. In the first five months of the current fiscal, TDS accounted for 50 per cent of the total collections. At the same stage last year, TDS accounted for only 45 per cent of the total collections in April-August 2006.
Advance tax collections grew 26 per cent in the first five months of the current fiscal on a year-on-year basis. Corporate tax collections during April-August 2007 grew 49.49 per cent at Rs 33,766 crore as compared to Rs 22,587 crore in the same period last fiscal. On the other hand, personal income tax (including FBT, STT and BCTT) grew by 33.76 per cent to Rs 27,206 crore as compared to Rs 20,340 crore during April-August 2006.
For the period under review, securities transaction tax (STT) collections grew 35.16 per cent and banking cash transaction tax (BCTT) grew 79.73 per cent.
It is largely economic growth that has helped. But buoyancy in economic growth alone cannot fully explain the 42 per cent jump in direct tax collections and nearly 50 per cent growth in corporate tax. There could be other factors like forex gains booked by corporate India in the first quarter from appreciating rupee. These gains are accounted as profits, leading to higher tax liability, said Mr Amitabh Singh, Tax Partner, Ernst & Young.