Tax collections during the current fiscal are likely to exceed the budgetary target by about Rs 37,000 crore, at Rs 7.82 lakh crore, in light of robust growth of the economy.
“The Budget target of tax revenue has been revised upward to Rs 7.82 lakh crore from Rs 7.45 lakh crore for the current fiscal,” Revenue Secretary Sunil Mitra told reporters here on Monday.
While the target for direct tax collection has been raised from Rs 4.30 lakh crore to Rs 4.46 lakh crore, the indirect tax collection estimate has been hiked from Rs 3.15 lakh crore to Rs 3.36 lakh crore, he added.
The upward revision in the tax collection target comes in the wake of 8.9 per cent economic growth during the first half of the current fiscal. According to estimates, the economy is likely to expand by about 9 per cent during the current fiscal, as against 7.4 per cent a year ago.
The buoyancy in the indirect tax collection during the current fiscal can also be attributed to partial withdrawal of economic stimulus measures in last year’s Budget.
In his 2010-11 Budget, Finance Minister Pranab Mukherjee raised excise duty by 2 per cent to 10 per cent as part of a plan to gradually withdraw the incentives given to industry to combat the impact of the global financial meltdown. While direct taxes include income tax and corporation tax, the indirect taxes levied by the government are excise, customs and service tax. On Sunday Pranab Mukherjee also said the targets for direct and indirect tax collections will be raised for this financial year and asked officials to intensify investigation against tax evasion.
Direct Tax collections target has been increased to four per cent and the indirect taxes to six per cent, he said addressing a review meeting of Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC) in Chennai.
Stressing the need for increasing tax collection, he said while the service sector had grown “enormously”, the rise in service tax collection was not commensurate. Mukherjee also pointed out the need to roll out the Goods and Services Tax (GST) regime to ensure a high rate of economic growth.