With the direct tax collection growing at a slower pace of 9 per cent this fiscal so far, the government is likely to miss the revenue mop up target for 2011-12.
According to the data released by the finance ministry, the net direct tax mop-up during the April-January period rose 9.28 per cent to Rs 3.46 lakh crore mainly on account higher realisation of personal income tax and corporate tax.
The government, however, may miss the full year direct tax collection target of Rs 5.32 lakh crore which envisaged a growth of 19 per cent over the last year. The net direct tax collection was Rs 3.17 lakh crore in the 10 month period of the 2010-11 fiscal.
The slow growth in direct tax collection comes on the back of declining GDP growth rate which is estimated at 6.9 per cent in 2011-12, down from 8.4 per cent a year ago. The gross direct tax collection during the April-January period, however, was up by 14.57 per cent at Rs 4.25 lakh crore. It was Rs 3.71 lakh crore in the corresponding period, a year ago.
Amid slowdown in industrial activities due to global factors and high domestic interest rates, revenue collections have come under pressure. As per the official data, gross corporate tax collection was up 12 per cent at Rs 2.85 lakh crore in April-January from Rs 2.55 lakh crore in same period in the previous fiscal. The personal income tax collection in the 10 month period of the current fiscal was up by 20.43 per cent at Rs 1.38 lakh crore. The growth in wealth tax was 45.11 per cent at Rs 682 crore against Rs 470 crore collected last year.
Amid volatility in the stock market, the securities transaction tax (STT) declined by 27.19 per cent at Rs 4,145 crore against Rs 5,693 crore in the year-ago period. With only two months of the fiscal remaining, the government will have to add Rs 1.86 lakh crore to its tax kitty to meet its budget estimates, which experts say is a tough task.
The government needs to collect as much of revenue possible from direct and indirect taxes to contain the widening gap between its income and expenditure in the fiscal year 2011-12. Its deficit is likely to shoot up due to higher subsidy bill and poor disinvestment receipts. The government had projected the fiscal deficit at 4.6 per cent of the gross domestic product in 2011-12.
