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West Bengal finance minister Amit Mitra might be taking pride in initiating a process of tax reforms through system-based compliance, but poor corporate tax collections might pour cold water over Mitra's effort.
This year, West Bengal had set income tax collection target of Rs 29953 crore, but so far the collection had been about Rs 21584 crore. The income tax department expects a shortfall of about Rs 700-1000 crore this year, according to G Pande, chief commissioner of income tax (CCA), Kolkata.
"One of the key reasons of the shortfall is tepid corporate tax collection, as sectors like mining, chemicals, banking and housing have not seen much growth," said Pande.
Much disappointment for the income tax department comes from laggard advance tax collection, which till about a few days ago had shown a growth of merely 2.67%. Moreover, while personal income tax collection this year has grown by nearly 12%, growth in corporate tax collection is only about 9%.
Simplified tax payment system, curbing leakages and reforms in value added tax (VAT) have been projected as some of the key financial reforms of the Trinamool Congress (TMC) government with Amit Mitra as the finance minister. However, low levels of industrialization continues to plague the prospects of higher revenue generation in the stae.
This year, while the industrial GSDP growth (at factor cost by economic activity at current prices) is expected to be almost flat at 12.90%, against 12.65% last year, some key sectors have been showing a declining graph.
According to the West Bengal Economic Survey, 2013-14, annual growth rate of GSDP growth rate of mining and quarrying sector (at factor cost by economic activity at current prices) is expected to come down to 8.25% this financial year, against 9.37% last year. Similarly, the growth in the manufacturing sector is projected to reduce to 7.69% this fiscal against 11.28% in 2012-13. Notably, despite state government's promises to revive the manufacturing sector through opening closed factories, not many efforts have seen the light of the day.
In the construction sector too, the GSDP growth rate this year is expected to come down to 11.56%, against 16.30 per in 2012-12 and a stellar growth of 21.35% in 2011-12. The same declining trend in growth applies to sectors like services, trade, hotels, transport and communication, real estate and other sectors.
In its presentation to the Planning Commission, West Bengal has said that since May 2011, the state received investment proposals of Rs 1.12 lakh crore, with a potential to create 314,000 jobs. However, the actual implementation of the projects is nowhere near the proposed investments. The year 2012 was particularly rugged in the industrial front for West Bengal. The state saw projects worth Rs 312 crore being implemented, which was a fall of nearly 85 per cnt over the previous year, and 97% over 2010-the last year of Left Front rule in the state, according to data from the West Bengal Economic Review 2012-13.
