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India Announces Surging Tax Revenues

by Lorys Charalambous,, Cyprus

25 September 2007

India's Ministry of Finance has announced that direct tax revenues surged in the first half of the fiscal year to top R1 trillion (US$25.1 billion), with growth in corporate tax receipts particularly strong.

The Ministry's figures showed that net tax collections stood at R1.06 trillion in the period from the start of April to September 21, 2007, more than 40% higher than in the same period in the last fiscal year.

Corporate tax recorded growth of 42.37% at R67.2 billion, up from R47.2 billion during the previous fiscal year. Personal income tax grew by 37.47% at R38.8 billion, up from R28.2 billion. The growth in Securities Transaction Tax (STT) was 45.52%, and Banking Cash Transaction Tax (BCTT) was growth was 21.36%. Fringe Benefit Tax (FBT) also jumped 87.41%.

In terms of payment types, advance tax increased by 32% and tax deducted at source (TDS) by 48%, indicating all-round buoyancy in taxes. Self-assessment tax grew by 81%, indicating better tax compliance levels, the Ministry observed.

The tax revenues figures are supportive of the findings of a study by the Associated Chambers of Commerce Industry of India (Assocham), published last month, which found that the contribution by private sector companies to the Indian government in corporate taxes has more than doubled in the last four years.

The Assocham Eco Pulse (AEP) study, released on Sunday, claimed that the amount of corporate tax paid by India's top 50 companies soared by 189% to R89.95 billion (US$2.2 billion) in 2004/5. Over the same period, corporate tax payments made by state-owned companies increased by a relatively modest 67%. Total corporate tax paid by all of India's companies increased by 159%, the study indicated.

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