The Income Tax department is monitoring advance tax collection of top assesses and of those companies who had paid high self-assessment tax last year to improve collections and meet enhanced target of Rs 4 lakh crore this year.
Despite growth in tax collection was lower than expected, government has increased the direct tax target from Rs 3.7 lakh crore of the Budget estimates to Rs 4 lakh crore for this financial year. A senior official of the Central Board of Direct Taxes (CBDT) said the department has drawn up a strategy in view of the new target and would keep a close watch on quarterly results of advance tax payers.
The investigation wing of the department has been asked to increase surveys and search operations to mop up additional tax from such actions. In the last financial, the department had collected around Rs 30,000 crore as a result of this exercise.
Though direct tax collection was quite low last year due to the slowdown, on an average, it has grown at an annual rate of 27% in the last five years and has more than trebled from Rs 1,05,088 crore in 2003-04 to Rs 3,38,212 crore in 2008-09, increasing its share from 4% to 6% of the GDP. Direct tax collection during 2008-09 was Rs 3.38 lakh crore, up from Rs 3.12 lakh crore during 2007-08, registering a growth of 8.3%.
This year, the government hopes to mop up an additional Rs 10,000 crore with the hike in the rate of Minimum Alternate Tax from 10% to 15%. Provisional figures available for advance tax payment for second quarter have shown encouraging results. Companies from sectors like oil and gas, auto, IT and banking have all paid higher advance tax indicating improved sales and profitability.
Before the slowdown, in September 2008, annual tax growth was 30%-40%. But with the close of 2008-09, net direct tax collection has grown only by 8.33%.