With a new Rs 4 lakh-crore target for direct tax collections in 2009-10, tax authorities are closely monitoring the second tranche of advance tax payments that will pour in till September 15. The Central Board of Direct Taxes (CBDT) is hopeful that the partial revival in the economic activities will translate into better tax payments by India Inc.

Adding to its optimism is the Budget provision to increase the minimum alternate tax to 15% from the earlier rate of 10%. Companies will now have to pay a higher MAT, which will obviously get reflected in their advance tax outgoes.

The Central Board of Direct Taxes expects this 5% hike in MAT to bring in about Rs 10,000 crore of additional revenue this fiscal.

The September 15 instalment is crucial as by then companies pay nearly half their advance tax liability for the fiscal. While they pay 15% of their estimated advance tax estimates in the June tranche, they pay a hefty 30% by September 15, followed by another 30% by December 15. The balance 25% is paid by March 15.

?Reaching a target of Rs 4 lakh crore in any year is difficult, and is especially so in this fiscal when the economy is still in the grips of a slowdown. While we are looking into additional means of revenue generation, advance tax payments are our biggest hope,? a CBDT official told FE.

Direct tax collections have registered a growth of about 2% to Rs 90,039 crore till now, as compared to Rs 88,589 crore in the same period a year ago. Similarly, corporate tax collections grew by 1.84% to Rs 49,339 crore between April and August 2009 as against Rs 48,450 crore in the corresponding period a year ago.

But with sectors like automobiles, cement and steel showing initial signs of recovery, tax authorities are confident that advance tax payments will improve. Despite the financial crisis, advance tax outgoes by banks and financial institutions have been largely the same.

The first instalment of corporate advance tax in June this year had already shown signs of recovery with collections remaining flat at about Rs 24,000 crore? almost equal to the June 2008 instalment.