Indian Direct Tax Collection Shows Slight Improvement

by Mary Swire, Tax-News.com, Hong Kong

22 February 2002

According to recent reports, direct tax collection in India so far this fiscal year is up slightly, but overall the Government is still lagging behind target with little chance of closing the gap before the end of the financial year.

Speaking to the PTI news service earlier this week, official sources revealed that net tax collection to January 2002 was at Rs 47,287 crore, meaning that the Government needs to mop up at least Rs 38,000 crore in the remaining two months of this quarter in order to meet their collection targets. However, going on the evidence of previous years this is unlikely, as the maximum collection which has been achieved in the last months of the two previous fiscal years is Rs 21,000 crore.

The sources blamed heavy tax refunds for the poor results: 'The trend of collection during the first ten months shows that although gross direct tax collection has improved over the last year by about 5.6% to Rs 60,449 crore, heavy refunds have almost neutralised the improvement in net collection,' one official told PTI.

As a result of this, net collection has effectively only improved by 0.26% on the April 2000 - January 2001 period.

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