New Delhi: India’s tax receipts crossed Rs5.88 trillion (Rs5,88,000 crore) during 2007/08, and senior officials said the government was confident of attaining this year’s target despite duty cuts and a possible slower growth in the economy.
Direct taxes grew by 38% to Rs3.09 trillion in the last fiscal year, while indirect taxes were more than Rs2.79 trillion, the chairmen of the two tax boards said late on 23 April.
Higher revenue growth is crucial for the federal government as it plans to spend more on social projects, subsidies and a farm debt scheme while cutting fiscal deficit to 2.5% of gross domestic product in 2008/09 from 3.1% in 2007/08.
In February, India slashed excise duties on a wide range of manufactured goods including cars and raised the income tax exemption limit to boost demand in Asia’s third largest economy.
The federal government has also cut import duties on edible oils as part of efforts to tame inflation that hit a three-year high of 7.41% in late March.
“The economy is growing at a robust pace, income of individuals have gone up and compliance has increased. There has been evidence that lower tax rates have led to higher receipts,” chairman of Central Board of Direct Taxes, P.K. Misra, said.
“We will be exceeding the target for this year also,” he said, referring to a Rs3.65 trillion budget estimate for 2008/09.
Direct taxes exceeded an upwardly revised target of Rs3.04 trillion in 2007/08 with corporate tax receipts growing 33.4% to Rs1.89 trillion while income tax was up 44% at Rs1.1 trillion, he said.
“Another Rs30 billion is expected to come.”
P.C Jha, chairman of Central Board of Excise and Customs, told Reuters: “We will no doubt cross the budget target this year also.”
India has set a target of Rs3.23 trillion in indirect taxes which includes excise, customs and service tax.
While duty cuts will definitely have some impact on revenues, Jha said the robust growth in industry and buoyant imports would offset the duty foregone.