|Tax, refund, tax|
|Monday, 09 January 2012 00:00|
A 14.5% rise in direct tax collections, at a time when industrial growth has plummeted, is quite encouraging. According to the Central Board of Direct Taxes, direct tax collections during April-December this fiscal were up 14.5% at R3,96,529 crore over the corresponding period last fiscal—gross collections of corporate tax were up 12.49% and personal income tax collections were up 19.1%. Probe a little deeper, and you realise the numbers are actually quite poor. For one, the budget target for corporate tax collections factors in a growth of 21.6%—in the case of personal income taxes, growth is higher than the budget’s 15.4%, but corporate taxes outweigh personal taxes 2:1. More worrying, however, is that this does not take into account over R70,000 crore of tax refunds. Once you factor this in, direct taxes grew just around 8% or well under half the 19.4% the budget targets. If growth picks up in the last quarter, if the core sector numbers are anything to go by, but whether this will bring back corporate profitability on track is doubtful—while corporate tax collections in the April-November period last year were around 47% of the full year’s target, they comprised around 41% of the budget’s target for this year.
Indirect tax collections show a similar shortfall and the largest shortfall is expected in the case of excise duties. All told, based on current numbers, a shortfall of around R40,000 crore in tax collections looks likely for the year. Whether the taxman chooses to make part of this good by forcing firms to pay higher advance taxes—just look at the growth in profits of firms compared to the growth in their advance tax collections—is irrelevant since the final numbers, taking into account the refunds, will become obvious in another 6-7 months. Given another R1 lakh crore extra expenditure on subsidies that the FM announced in Parliament was due to the fall in the rupee’s value, the shortfall in disinvestment and in telecom receipts (for the ‘extra’ spectrum held by the older telcos), and you’ve got a budget that’s awfully out of whack.
|Last Updated ( Wednesday, 02 May 2012 09:01 )|