In spite of inflationary pressures, the Direct Tax Collection (DTC) has registered a robust growth of 38.61% in the April-June period of this Financial Year (2008-2009), as per a finance ministry release. In absolute terms, the DTC rose to RS. 57373 crores from RS.41391 crores collected in the corresponding period last year. This too in the face of higher refunds of Rs.11578 Crores against Rs.7302 crores during the corresponding period last fiscal.
An upbeat Finance Minister, P.Chidambaram has asked the Central Board of Direct Taxes to revise the budget estimates to Rs.400000 crores for this financial year, from the estimated target of Rs.365000 crores set earlier. Last year the government was able to mop up Rs.314000 crores from direct taxes.
The Reserve Bank of India (RBI) predicted a GDP of 8.5% for this year down from 9% last fiscal. However, the data released by the finance ministry today (4th July’08) do not seem to corroborate the RBI forecast.
If this trend persists over the next three quarters, the government would be able to contain the fiscal deficit to within 2.5% to 3% of GDP. According to economic circles however, the rising inflation, interest rate hikes and high crude prices are likely to put pressure on corporate margins, resulting in lesser growth in tax collection for the rest three quarters of this year.