At a time when India’s fiscal deficit is not keeping pace with the Budget target, the central government’s direct tax collections are not adding much. Gross direct tax collections declined 0.6 per cent to Rs 27,039 crore in October, over the Rs 27,205 crore collected in the same month last year.
Similarly, net direct tax collections (after adjusting for refunds) rose just marginally by 6.4 per cent to Rs 24,038 crore in October, against Rs 22,589 crore a year before.
This took gross direct tax collection during the first seven months of 2011-12 to Rs 2.84 lakh crore, about 20 per cent higher than the Rs 2.36 lakh crore in the corresponding period of 2010-11. Similarly, net direct tax collections rose 7.1 per cent to Rs 2.19 lakh crore during April-October against Rs 2.04 lakh crore in the same period of 2010-11, according to an official statement.
While gross collection of corporate taxes was up 20.3 per cent to Rs 1.9 lakh crore against Rs 1.58 lakh crore last year, gross personal income tax mop up rose 20.2 per cent to Rs 93,769 crore against Rs 78,029 crore last year.
The fiscal deficit for the first six months was already 70 per cent of the Budget estimate for all of 2011-12, as revenues were not keeping pace with expenditure.
The difference in the Centre’s expenditure and receipts till September was more than double in the corresponding period last year. The fiscal deficit was Rs 2.92 lakh crore till September versus Rs 1.33 lakh crore in the same period last year.
Economists said the fiscal deficit target of 4.6 per cent of GDP for this fiscal deficit was not going to be met. Tax revenues for the first six months of 2011-12, both direct and indirect, were just 36.6 per cent of Budget estimates for the entire year, against 43.7 per cent in the corresponding period of last year.
The latest data of direct tax collections come at a time when the finance ministry has raised the target of direct tax mop-up for the current financial year by 10 per cent, to Rs 5.85 lakh crore from the earlier Rs 5.32 lakh crore . The new target is 31 per cent higher than the Rs 4.46 lakh crore in direct tax collected in 2010-11.
India’s economy has been showing signs of slowing. It grew at a six-quarter low of 7.7 per cent in the first three months of this financial year and signs for the second quarter are equally discouraging.
