Weeks before the presentation of budget for the next financial year, a senior finance ministry official expressed confidence that the government would be able to achieve tax collection target of Rs. 14.50 lakh crore set in this year’s budget. The government hopes to earn Rs. 40,000 crore more on indirect taxes that will meet the shortfall in direct tax collections due to weak corporate earnings.
In the last two financial years, the government had to downwardly revise its tax collection target set in the budget due to lower than expected revenue collection.
“We are likely to exceed the collection in Indirect Tax by about Rs 40,000 crore in the current year. On the whole, we are optimistic of close to 100% achievement of overall tax revenue target of the year,” Revenue Secretary Hasmukh Adhia tweeted on Wednesday.
Of the Rs 14.49 lakh crore tax revenue target, Rs 7.97 lakh crore was estimated to come from direct taxes (corporate and income tax) and another Rs 6.47 lakh crore from indirect taxes (customs, excise and service tax).
The government reported an increase of 33% in indirect tax collection and around 11% in direct tax collection in the first 10 months of this financial year over the tax collected during the same period last fiscal. The total collection of both indirect an direct tax stands at 73.5% of this year’s budget estimates.
Last fiscal, the government had targeted Rs 13.64 lakh crore in tax revenues but at the end of the year it was revised downwards to Rs 12.51 lakh crore, a shortfall of over 8%.
That year, the direct tax collection was Rs 7.05 lakh crore, short of Rs 7.36 lakh crore target. Indirect tax revenues at Rs 5.42 lakh crore too were short of the target of Rs 6.24 lakh crore.
In 2013-14, tax collection targets were revised downwards to Rs 11.58 lakh crore from budgeted Rs 12.35 lakh crore, a shortfall of over 6%.
In the current fiscal, the growth in Custom Duty revenue on electrical machinery was 34.4% and in other machinery it was 27.8%.
“These are indicators of new investment taking place in private sector,” Adhia said.
In the Services Sector, as against 27.2% average growth rate, the growth rate in banking and financial services was 44.6%. In work contract services it is 39.9% and in goods transportation services growth rate is 41%.
“These are also indications of high level of economic activities happening,” Adhia said.
Adhia’s comments assume significance as as per the latest data released by the country’s central statistical office (CSO) this week, India’s GDP growth slowed to 7.3% during October-December quarter after growing at a faster pace of 7.6% in April-June and 7.7% in July-September quarter.
However, the CSO estimated that Indian economy would grow by 7.6% this financial year, the fastest pace in five years.
(With inputs from agencies)