Gross direct collection for 11 months (April-February) of financial year 2014-15 was up by 10.67 per cent at Rs 6,12,432 crore against Rs 5,53,373 crore collected during the same period last year. The collection slowed down from 11.38 per cent for 10 months till January. Recent figures released by the government indicate that tax collection is 87.0 per cent of Rs 7,05,628 crore for fiscal year 2014-15, according to the revised budgetary estimates.
The finance minister, while presenting the first full-term Budget, announced that tax collection was low for the fiscal year and revised the figures further downwards. The gross direct tax collection includes personal taxes, corporate tax and wealth tax.
The government in its first full-term budget announced a simplification of exemptions for corporate tax and a reduction in the corporate tax from 30 per cent to 25 per cent. Gross direct tax collection of corporate tax showed an increase of 9.99 per cent and stood at Rs 3,79,917 crore against Rs 3,45,396 crore collected during the same period last year. According to the revised budgetary estimates, which estimated revenues of Rs 4,26,079 crore from corporate taxes, the government has been able to achieve 89 per cent of the target.
The Budget did not make much announcements in terms of personal taxes barring some exemptions in terms of NPS, medical and transport allowances. Gross collection of personal income tax was up by 11.10 per cent and stood at Rs 2,25,313 crore against Rs 2,02,806 crore collected during the same period last year. The government collection has been stellar in case of revenue from State Transactions Tax. Government figures indicate that Securities Transaction Tax (STT) stood at Rs 6,280 crore at a growth of 45.44 per cent which is higher than revised budgetary target of Rs 5,992 crore.
Slow growth in the Indian economy has hurt the profitability of the corporate sector and tax collections. The tax collection growing at a weaker rate makes it more difficult for the government to achieve its fiscal deficit target of 4.1 per cent.
Advance tax collection has shown a growth of 13.41 per cent during April-February of FY 2014-15 against a growth of 8.67 per cent at the same period the previous year. Growth in TDS declined to 7.49 per cent against 16.69 per cent, the press release stated.
The Reserve Bank of India (RBI) unexpectedly slashed rates by 25 bps on Wednesday to 7.5 per cent relaying confidence that the government would achieve the current year’s fiscal target. The slowdown in tax collection would be a dampener for the RBI, if collection does not pick up in March. Calls for another rate cut are growing as RBI is expected to meet next on April 7, 2015 for the next bi-monthly monetary policy statement.
(Edited by Joby Puthuparampil Johnson)