Growth in Indirect & Direct Tax Collections

Direct Tax Collections During Financial Year 2011-12 Up by 13.02 Percent at Rs. 5,90,077 Crore as Against Rs 5,22,104 Crore During Financial Year 2010-11

 

Gross direct tax collections during April-March of the F.Y. 2011-12 was up by 13.02 percent and stood at Rs.5,90,077 crore as against Rs.5,22,104 crore in the same period in F.Y.2010-11. While gross collection of corporate taxes was up by 11.52 percent. The gross collections on this account stood at Rs.3,96,208 crore as against Rs.3,55,267 crore during the F.Y. 2010-11. The Gross Collection on account of personal income tax was up by 16.20 percent and stood at Rs.1,93,042 crore as against Rs.1,66,130 crore in F.Y. 2010-11. Net direct tax collections during the F.Y. 2011-12 stood at Rs.4,94,799 crore, up from Rs.4,46,935 crore in the same period in F.Y.2010-11, registering a growth of 10.71 percent.

 

Growth in wealth tax was 14.56 percent. The Gross Collections on this account stood at Rs.787 crore as against Rs.687 crore in the same period during the F.Y.2010-11. Growth in Securities Transaction Tax (STT) was -20.95 percent. The Gross Collections on this account stood at Rs.5,656 crore as against Rs.7,155 crore in the same period during the F.Y.2010-11.

Indirect Taxes :

Despite a slowdown in growth and the duty cuts effected on petroleum products in June 2011, the indirect tax collection of Rs. 3,92,781 crore (excluding cess) is only marginally short of the Revised Estimates of Rs. 3,94,000 crore in 2011-12.

The target for indirect tax collections in 2012-13 has been placed at Rs.4,99,694 crore. It is a growth of over 27 per cent. This target has been fixed keeping in view the increase in central excise and service rate from 10 to 12 per cent the observed buoyancy in service tax collections.

Service Tax collection in 2011-12 which, at Rs. 97,389 crore, far exceeded the Budget Estimate of Rs.82,000 crore. The rate of Service Tax has been enhanced to 12 per cent in the Union Budget, 2012 in order to gradually move towards a unified GST regime. A 'Negative List' approach for taxation of services is being introduced in the current fiscal. Under the new approach, all services except those in the 'Negative List' or otherwise exempted, would come into the tax net. The new system will come into effect from 1st July, 2012. The new comprehensive approach to taxation of services is a shining piece of tax reform, preparatory to the introduction of GST. In a nutshell, the comprehensive approach to taxation of services implies larger tax base with limited number of exemptions.On the Central Excise side the standard rate of excise duty has been increased from 10 to 12 per cent in the Finance Bill, 2012. These changes are likely to help the Department in garnering additional tax revenue.

@@@  The Indian economy registered a healthy growth of 8.4 per cent in 2009-10 and 2010-11. However, renewed global uncertainty, emanating mostly from the Euro zone area affected domestic business sentiments in 2011-12. A tight monetary policy directed at taming inflationary pressures in the economy also came in the way of consolidating this recovery. GDP growth in 2011-12 has slowed significantly to just 6.5 per cent.

@@@ There is a declining trend in tax- GDP ratio by augmenting tax collections. This ratio was nearly 12 per cent in 2007-08 but has dropped to around10.5 per cent in 2011-12.