Tax collections may top budget estimate: Centre

Indirect tax mop-up may see a shortfall

“It is very unlikely that the estimates on indirect tax will be met, but on direct taxes front, we are maintaining that it will be more than met,” Finance Secretary Ashok Chawla told reporters. “Overall between indirect and direct taxes, total collection will correspond to the Budget estimate or more,” he observed.

According to the Budget estimate, the government aims to earn Rs 6.4 lakh crore from direct and indirect taxes during the current fiscal. It expects the direct tax mp-up for current fiscal to well exceed budget target of Rs 3.7 lakh crore. The indirect tax collection is estimated at Rs 2.7 lakh crore.

During the first seven months of the fiscal, the indirect tax collection shrunk by over 21 per cent to Rs 1.26 lakh crore, against Rs 1.61 lakh crore a year ago owing to the economic slowdown. He said taxing perquisites is not new because such incentives were under the net even prior to the Fringe Benefit Tax. “My understanding is that perquisites were being taxed in the hands of employees even earlier, prior to Fringe Benefit Tax (FBT)...so there is nothing new which has happened,” he added.

Cash for loss of oil PSUs
He further hinted at giving fuel retailers cash for revenue they lose on selling domestic LPG and kerosene below cost instead of prevalent practice of issuing oil bonds.

“We would ideally want to provide (for revenue loss) in the Budget and not give oil bonds because either way its indirectly or directly part of the fiscal,” he said, adding “there is no great need or rationale in giving oil bonds to oil marketing companies.”
The government, which last fiscal issued oil bonds worth Rs 71,292 crore to Indian Oil, Bharat Petroleum and Hindustan Petroleum, has not issued it this fiscal. This has seen BPCL and HPCL slip into red while IOC barely posted profit in Q2.

In absence of bonds, the three may report losses in the third quarter, a worry that led Petroleum Minister Murli Deora to the Prime Minister Manmohan Singh seeking a direction to the finance ministry for issue of Rs 20,872 crore of oil bonds to make up for revenue lost of LPG and kerosene in first three quarters.

“There is no specific decision on how much compensation is required to be given to the oil marketing companies. It is still under consideration and discussion,” he said.  Chawla said a decision on giving out cash to retailers would have to be taken at the highest level.