Gross direct tax collections (inclusive of refunds) increased by merely 6.51 per cent to Rs 1.64 lakh crore in April-August against Rs 1.54 lakh crore in the corresponding period last year. The muted growth can be attributed to almost flat corporate tax collections during the five-month period, reflecting subdued outlook on both economic growth and industrial output.
Gross collection of corporation taxes showed a meagre increase of 0.15 per cent and stood at Rs 96,738 crore at the end of August against Rs 96,597 crore a year ago. Gross collection of personal income-tax, on the other hand, was up 17.09 per cent at Rs 67,420 crore against Rs 57.582 crore, the finance ministry said in a statement on Monday.
Around 6,000 companies pay 90 per cent of corporation taxes, which constitute 65 per cent of direct tax collections. Corporation tax collections have remained subdued this year as gross domestic product growth came down to 5.5 per cent in the first quarter of 2012-13 against eight per cent in the year-ago period. Industrial output contracted 0.1 per cent in the quarter against seven per cent a year ago.
Net direct tax collections increased 28.15 per cent to Rs 1.24 lakh crore during April-August against Rs 96,738 crore in the year-ago period. The high growth was mainly on account of moderation of income-tax refunds this year, compared with huge refunds issued in the first few months last year.
Growth in wealth tax was 40.63 per cent and stood at Rs 225 crore against Rs 160 crore. Collections from securities transaction tax (STT) fell 14.94 per cent to Rs 1,719 crore, compared with Rs 2,021 crore a year earlier.
Net direct tax collections at Rs 1.24 lakh crore are just about 21.7 per cent of the Budget Estimate of Rs 5.70 lakh crore for this year. Finance Minister P Chidambaram and the Central Board of Direct Taxes (CBDT) have exuded confidence that the target would be met despite a slower growth in the year so far.
Chidambaram recently said the collections would pick up in the second half and September advance tax collection figures would give an indication where the collections were headed.
To raise its tax collections, the ministry would focus on increasing the tax base, making people file returns and quickening the process of assessment.