Indian Government Issues Tax Collection Review

by Carla Johnson, Investors Offshore.com, London

17 October 2007

The Indian Ministry of Finance and Central Board of Direct Taxes have issued a joint statement which reviews the success of the tax collection system over the past six months.

The review states that direct tax collections maintained a growth of over 40% for the six-month period which ended September 2007. Net tax collections stood at Rs.1,11,055 crore, up from Rs.79,208 crore during the same period last fiscal.

Corporate tax recorded a growth of 41% at Rs.72,240 crore, up from Rs.49,813 crore during the previous fiscal. Personal income tax (including FBT, STT and BCTT) grew by 39% at Rs.40,744 crore, up from Rs.29,329 crore. The growth in Securities Transaction Tax (STT) was 48%, and Banking Cash Transaction Tax (BCTT) was 17%. Fringe Benefit Tax (FBT) recorded a growth of 103%.

In terms of payment types, advance tax increased by 30% and tax deducted at source (TDS) by 48%, indicating all-round buoyancy in taxes. Self-assessment tax grew by 80%, indicating better tax compliance levels.

Among regions, corporate tax growth was the highest in Bihar-Jharkhand at 265%, while it was lowest in Vidarbha at minus 34%. Personal income tax growth was the highest in Vidarbha at 83%, while it was lowest in the northeastern region at minus 17%. Mumbai region recorded a growth of 96% in corporate taxes and 40% in personal income tax. The Delhi region recorded a growth of 8% in corporate taxes and 29% in personal income tax.

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