Direct tax collections have slowed down significantly in the first seven months of the fiscal to register a growth of 29.52 % till October 2008, in sharp variance to the 43.15% growth registered in the same period a year ago. Net direct tax collections stood at Rs 1,66,905 crore till October 31, 2008, as against Rs 1,28,864 a year ago, as per official figures released on Thursday.
However, the finance ministry maintained that tax collections have remained unaffected by the economic crisis. ?The momentum of growth in direct taxes could be maintained, despite present global financial crises / recession and its resultant impact on the Indian economy, mainly on account of a shift in the tax collection strategy of the Central Board of Direct Taxes towards improving the tax deduction at source (TDS) mechanism and encouraging better tax compliance,? it said.
In step with the less than buoyant Q2 results for most of India Inc, the corporate income tax mop-up has registered an increase of 33.49% to Rs 1,05,174 crore in the period as compared to Rs 78,785 crore a year ago. However in October 2007, collections from corporate tax had risen by a whopping 45.71%. Companies also paid lower advance tax in the September 15 installment this year, in anticipation that their profits would be lesser this year.
The slowdown in collections is also apparent in personal income tax (including FBT, STT and BCTT), where the Exchequer netted Rs 61,433 crore till October 31, 2008, as against Rs 49,890 crore in the same period a year ago. While fringe benefit tax collections increased by 47% and dividend distribution tax collections grew 48%, the mop up from securities transaction tax slipped to a negative of 1.6%.