Direct tax collections witnessed a marginal pick-up in the third quarter ended December at 15 per cent, indicating a possibility of meeting the annual target of Rs 39,403 crore.
Direct tax receipts had slowed down to 11 per cent at the end of the first six months ended September from a growth rate of 20 per cent in the first quarter ended June. This is against an annual growth rate target of 17 per cent.
Finance ministry officials attribute the subdued trend in tax collections to the high interest rate regime which has forced a squeeze on corporate profits.
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At the end of December 31, 1996, with the government having received the third instalment of advance tax payments, the collection under corporation tax was Rs 12,222 crore (as compared with Rs 11,578 crore in the same period in 1995-96) and Rs 11,605 crore for income tax (Rs 9,749 crore). Though, we are closely monitoring the trends we are reasonably confident of meeting the year-end targets, says a senior official.
A significant aspect of the collections this year has been the step-up of receipts by way of tax deduction at source, particularly after the spurt in bank deposits. This is evident from the revenue data on interest tax with the collections at Rs 1,079 crore at the end of this period as compared with Rs 446 crore in 1995-96.
The marginal pick-up, according to senior government officials, is to an extent due to the receipt of the minimum alternate tax (MAT).
The receipts under corporation tax aggregated Rs 6,504 crore at the end of September as compared with Rs 6,328 crore in the same period in 1995-96. Income tax accruals in this period aggregated Rs 6,789 crore as compared with Rs 5,548 crore in the same period last year, indicating a growth of 22 per cent.