New Delhi: The direct tax receipts for April 08 to January 09 were up by a slower-than-expected rate of 12.5% to Rs2.47 trillion but the government is hopeful of meeting the annual target by 31 March, a senior official said on Wednesday.
“The direct tax collection touched Rs2,47,000 crore (2.47 trillion) as on 1 February, growing by 12.5%,” said S.S.N. Moorthy, the chairman of Central Board of Direct Taxes (CBDT).
The data has fuelled speculation of higher market borrowing by a cash-strapped government that has pledged to spend an extra Rs1.47 trillion in fy09 and foregone revenues by cutting factory gate duties by 4% in December.
Direct tax receipts, which were 39% up until the June quarter, began to fall as the global slowdown started pinching Indian companies.
Firms which anticipate slower profit growth, have paid 22% less advance tax to the government during the December quarter, compared to year-ago figures.
Last year, government set a target of 20% growth in corporate tax collection to Rs2.26 trillion and a 14% rise in income tax collections to Rs1.39 trillion for fy09. The target for total receipts was Rs3.65 trillion.
“There is a slowdown in revenue collection but we are hopeful of meeting the budget target of Rs3.65 trillion by this fiscal year end,” Moorthy told reporters after a conference.
The growth in receipts until January were lower than the annual growth target of 17.6%, raising doubts that revenues may fall short of the budget target.
“The present growth rate in direct tax collection should not be disappointing as the budget estimates were made on the assumption of a 9% growth in the economy in 2008/09,” said N.R. Bhanumurthy, an economist with Institute of Economic Growth.
Last week, the Reserve Bank of India (RBI) said the economy could grow at 7% or less in fiscal year 2009, lower than 9% last year, while the fiscal deficit could widen to at least 5.9% of gross domestic product (GDP).
“The slowdown in tax collection will put more pressure on government borrowing programme next fiscal,” said Bhanumurthy.