Indian Direct Tax Mop-Up Receives Boost

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

21 June 2001

The Indian Finance Ministry may have some cause for celebration, it was revealed recently. The ministry's direct tax mop-up received a blow earlier this year, when it was announced that corporate tax collection figures had taken a beating due to an unexpectedly high number of refunds. However, the first instalment of advance tax collections in Mumbai on June 15th registered a 10% growth.

Corporates in the city presently pay 15% of their tax liability for the entire year in their first instalment, and the amount received represents almost 43% of the total budgeted corporate tax collections, which is good news for Finance Minister Yashwant Sinha, who was quoted in an interview in May as saying that he was 'surprised' by the shortfall in direct tax collection.

Besides Mumbai, which the government has recently asked the Central Bank to investigate as a possible offshore financial centre, the Ministry has also received positive feedback from several other centres, which it says is encouraging in the light of the countrywide sluggishness that has been experienced recently. The all India figures have been promised within the next couple of days, but the recent news regarding Mumbai has lifted the spirits of senior officials, who have stated that the projections made in this year's budget were 'more realistic'.

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