Small cities richer on tax

Smaller cities such as Jaipur, Ahmedabad and Chandigarh have seen the sharpest increase in corporate income tax collections in 2006-07, indicating that the benefits of strong economic growth are spreading beyond the big cities.

Jaipur's corporate tax collections shot up 158 per cent to Rs 2,884 crore in 2006-07, against Rs 1,118 crore in the previous fiscal. In comparison, tax collections for the whole country grew 44.7 per cent during the year.

Corporation tax collections from the Chandigarh commissionerate surged 95 per cent to Rs 2,946 crore in the last fiscal, against Rs 1,512 crore in the previous fiscal. 

BIG GAINS FROM SMALL CITIES Corporation Tax collections
(In crore)	2005-06	2006-07	Growth (%)
Jaipur	1,118	2,884	158
Chandigarh	1,512	2,946	95
Ahmedabad	3,068	4,984	62
Bhopal	1,739	2,794	61
Mumbai	34,006	48,984	44
Delhi	18,511	28,589	54

Similarly, Ahmedabad saw a 62 per cent increase in collections at Rs 4,984 crore, while Bhopal recorded 60 per cent growth at Rs 2,794 crore.

"Many small and medium companies from tier-two cities are expanding in India as well as globally. So, I am not surprised that it is getting reflected in corporation tax collections," said Sudhir Kapadia of KPMG.

Most professional services firms used to draw their business from the metros. Now, Kapadia added, KPMG's business is evenly spread across the country.

"Firms are going to cities like Chandigarh, Mohali and other places due to congestion in Mumbai and Delhi and the high real estate prices there," said Amitabh Singh, partner, Ernst & Young.