Officials say it will impact direct tax collections in current financial year
The Central Board of Direct Taxes (CBDT) is worried over interest rate rises by the Reserve Bank of India (RBI) to curb inflation impacting direct tax collections in this financial year.
CBDT officials told Business Standard that companies had indicated the rate rise was raising their cost of borrowings and impacting their bottom lines, which would have a bearing on their tax payments this year. “This year’s target of collecting Rs 5.33 lakh crore is stiff and the rate rise is certainly putting pressure on collections,” said an official. He, however, said the board would devise its strategy to meet the target.
| DIRECT TAX COLLECTIONS | |||
| Collections/refunds | 2011-12 | 2010-11 | Growth (%) |
| Gross collections | 69,551.10 | 55,419.90 | 25.50 |
| Refunds | 40,246.80 | 13,705.40 | 193.70 |
| Net collections | 29,304.30 | 41,714.50 | -29.80 |
| (in Rs crore) up to June 13 (2011-12) Source: CBDT Direct tax collection target for 2011-12 is Rs 5.33 lakh crore. Actual collections in 2010-11 was Rs 4.46 lakh crore. | |||
The CBDT is now contemplating an enhanced focus on tax deducted at source (TDS) which constitutes around 38 per cent of the total direct tax collection of Rs 4.46 lakh crore in 2010-11. The official said a comprehensive strategy would be formulated soon for this purpose. Showing growth of 25.5 per cent, gross direct tax collection up to June 13 in the current financial year stood at Rs 69,551 crore as against Rs 55,420 crore collected during the same period last year.
Net collections, however, witnessed a decline of 29.80 per cent at Rs 29,304 crore up to June 13 this year as against the figure of Rs 41,714.50 crore in the same period last year. The corporate tax collection during this period has been Rs 3,619.50 crore and personal income tax Rs 24,545 crore.
Rest includes share transaction tax Rs 1,108 crore, fringe benefit tax Rs 8.50 crore and other taxes Rs 23.80 crore. Refunds during the period from April to June 13 in the current financial year stood at Rs 40,246.80 crore as compared to Rs 13,705 crore issued during the same period last year — a jump of 193.70 per cent.
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The interesting trend witnessed in the direct tax collection this year has seen second-tier centres like Chandigarh, Bhopal, Patna and Lucknow performing much better than Mumbai, Delhi and Chennai.
Growth in direct tax collection in Chandigarh up to June 13 in the current financial year stood at 62.50 per cent over the previous year’s collection during the same period. Similarly, Bhopal, Patna and Lucknow witnessed growth of 57.80 per cent, 60 per cent and 86.50 per cent, respectively, during the same period this year.
In comparison, growth rates of direct tax collections declined in Mumbai, Delhi and Chennai by 54 per cent, 99.80 per cent and 5.4 per cent, respectively. The CBDT official said the reason behind better performance by smaller centres over major ones was improving TDS collections.