The Centre’s strategy to keep a tight leash on income-tax refunds this year seems to be paying rich dividends.
Aided by 42.59 per cent decline in refund outgo, the Centre’s net direct tax collections recorded a 47.16 per cent increase in the first quarter of this fiscal to Rs 84,273 crore (Rs 57,267 crore).
This is significant given that net direct tax collections had recorded a 17 per cent decline in the first quarter last year.
Already, the Finance Ministry has made it clear that the refund outgo this fiscal will be much lower than the Rs 95,000 crore paid out in 2011-12.
On a gross basis, direct tax collections in the first quarter grew 6.77 per cent at Rs 1,11,182 crore (Rs 1,04,135 crore). This growth is, however, much lower than the 23.91 per cent growth seen in the same quarter last year.
However, the gross collection performance is not all that bad given the sluggish economic environment here, say economy watchers.
With tepid Western markets, merchandise exports declined in value terms in the first two months of the current fiscal.
For the first quarter, gross collection of corporate taxes grew 3.48 per cent, while personal taxes were up 13 per cent. This is lower than the 23.49 per cent and 24.63 per cent growth, respectively, in same quarter last fiscal.
Securities transaction tax (STT), which is a tax on stock exchange trades, declined 0.52 per cent to Rs 952 crore (Rs 957 crore). STT collections had declined 20.95 per cent in 2011-12 to Rs 5,656 crore (Rs 7,155 crore).
Wealth tax revenues declined 3.03 per cent in April-June to Rs 32 crore (Rs 33 crore).
The gloomy economic mood this fiscal has made it difficult for the taxman to meet targets. The Centre is looking to collect direct taxes of Rs 5.70 lakh crore this fiscal, reflecting a 15 per cent rise over actual collections last year.
Govt policy
Direct tax collections have been growing at a scorching pace since the mid-1990s, thanks to the Government's policy to persist with stable and moderate tax rates. Direct tax revenues have grown 15 times in the last 15 years.
It is only in the latest Budget that the Government again tried to tilt the balance in favour of indirect taxes for mopping up additional revenues.
The Finance Ministry has already chalked out a strategy for achieving the direct taxes target for 2012-13. The Chief Commissioners of Income Tax have been asked to focus on sectors that are likely to do well in the current fiscal. Theses include consumer goods, software, two-wheelers, cement, infrastructure, auto four-wheelers, pharma, oil marketing companies and some banks.