Amid slowdown in the industrial production which may be further dampened by hike in key policy rates by the Reserve Bank of India (RBI), the Finance Ministry today said corporate tax collection could take a beating in the current fiscal.
"I am worried about the likelihood of a slight slowdown in the corporate tax growth rate. Now again, the RBI today came out with announcement on the rate increase. We have to see how it works out," Finance Secretary Sunil Mitra told reporters here.
His statement follows the Reserve Bank's announcement of hiking its short-term lending (repo) and borrowing (reverse repo) rates by 25 basis points to contain inflation which is hovering over 9%.
While the short-term lending rate has been raised to 7.5%, the borrowing rate has been hiked to 6.5% by the central bank.
The factory output measured in terms of Index of Industrial Production (IIP) declined to 6.3% in April from 13.1% in the same month last year.
"I do have a little worry about slow down that is being observed in industrial indices [and] also in the core sector growth," Mitra said.
On meeting the target of direct tax collections, he said, "The fact is that corporate tax is the larger component of direct taxes, so if there is a slowing down of growth there then I do have a reason for concern. But on income tax front, we are doing pretty much well."
According to latest data on advance tax collection, companies in important sectors like oil and cement have paid lower taxes as compared to the previous fiscal in June.
