The central government, keen to meet its deficit reduction estimates for this year, has internally revised its direct tax collection target for the year to R5.85 lakh crore, up from R5.32 lakh crore estimated in the Budget. According to a finance ministry source, the new target would be achieved by ensuring better compliance (through tax deducted at source or TDS mechanism) and focused approach on arrear collection. The income tax department plans to collect R26,000 crore through arrears in the current year.
The government is under pressure to achieve its fiscal deficit target of 4.6% of the GDP in the current fiscal. The target has become challenging after the finance ministry decided to borrow R53,000 crore more than the budgeted level.
?The net direct tax collection growth is not robust in the first half of the current year, mainly due to higher refunds. However, the gross collection is strong. With lesser refunds disbursal in the remaining part of the year, the collection is expected to be good,? the source said, justifying that higher target could be achieved.
On account of R62,000 crore refunds, the net direct tax collection rose by 7% to R1.94 lakh crore in the first half of the current fiscal as compared to the corresponding period last year. However, the overall gross collection rose by 23% to R2.57 lakh crore during April-September this year. Earlier, finance minister Pranab Mukherjee had also asked the Central Board of Direct Taxes (CBDT) to achieve 10% more than the Budget estimate.
In the last fiscal, the income tax department collected R4.46 lakh crore. Therefore, the growth needs to be 31% more to achieve this target.
Besides, the government suffered a notional revenue loss of Rs 49,000 croe after it removed 5% customs duty on petroleum crude, import duty on petrol and diesel and also abolished the Rs 2.6 per litre basic excise duty levied on diesel in June this year.