Growth in direct tax collections moderated slightly in August, but the government is firmly on course to meet its target for the current fiscal year. Collections from smaller regions, however, continued to be robust, underscoring the broadbased growth in the economy.

The real picture will emerge only after September when corporates pay advance tax, an income tax official said.
In the five months to August, the government raised RS 1,00,112 crore from direct taxes, up 14% from the corresponding period a year ago, data released on Monday showed.

The growth in five-month collections saw a slight moderation from the 15.7% growth in April-July, but was more than the 11% needed by the government for the entire year to meet the budgeted direct tax revenues of Rs 4,30,000 crore.

June quarter was very positive and we expect the trend to continue, the official said, and cautioned against reading too much into the slight moderation.

Crisils chief economist D K Joshi said the government would meet the direct tax target because of the strong recovery and better salaries.

Indirect tax collections have grown at a faster pace 46.2% for April to July and together with the robust direct tax receipts have given the government fiscal room.

The additional about Rs 55,000 crore expenditure proposed by the government through additional demands will eat up the extra Rs 65,000 crore the government got from the auction of 3G and broadband spectrum.

This makes a good tax performance and successful disinvestment programme crucial for the governments fisc.
The government has budgeted a fiscal deficit of 5.5% of GDP for the current year.

Growth in personal income tax collection including securities transaction tax, residual fringe benefit tax and banking cash transactions tax has also moderated marginally to 9.68% from 11% for the first four months.

However, the trend of strong growth in personal tax collections from the smaller regions are an endorsement of the direct tax reforms and a more broad-based growth.

The Patna region, comprising Bihar and Jharkhand, led the growth in personal income tax mop up, registering a whopping 90% growth.

In comparison, the Lucknow region (UP-East) registered a growth of 70% rise while the Guwahati region (North-East) saw a 48%.

Meanwhile, the growth in corporate income tax collection was highest in the Bhopal region (MP-Chhattisgarh) at 185%, followed by the Delhi region that recorded a 63% growth.