Direct tax collections in the first seven months of the current fiscal grew 28 per cent, significantly slower than 43 per cent in the corresponding period last year, because of poor advance tax collections.
However, this is still above the 26 per cent growth needed to achieve the revenue department’s internal target for the current financial year.
Advance tax receipts grew a paltry 13.57 per cent in April-October 2008. As advance tax collections account for nearly two-fifths of the central government’s direct tax kitty, any slowdown under this head will bring down the overall growth.
A slowdown in advance tax collections is also considered a leading indicator of slowing economic growth as companies and individuals pay advance tax on the basis of their earning estimates for the full year.
“The growth in advance tax collections is likely to come down further in the quarter ending December 31,” said a senior Central Board of Direct Taxes official. However, the department was trying to make up for the lower advance tax collections by strictly enforcing tax deducted at source (TDS) rules and raising additional tax from companies evading taxes, the official added.
