Indian Economy is Upbeat With Higher Tax Collections in First Quarter

by Santosh Kumar Agarwal for Alarm Bells    July 05, 2008

In spite of inflationary pressures, the Direct Tax Collection (DTC) has registered a robust growth of 38.61% in the April-June period of this Financial Year (2008-2009), as per a finance ministry release. In absolute terms, the DTC rose to RS. 57373 crores from RS.41391 crores collected in the corresponding period last year. This too in the face of higher refunds of Rs.11578 Crores against Rs.7302 crores during the corresponding period last fiscal.

An upbeat Finance Minister, P.Chidambaram has asked the Central Board of Direct Taxes to revise the budget estimates to Rs.400000 crores for this financial year, from the estimated target of Rs.365000 crores set earlier. Last year the government was able to mop up Rs.314000 crores from direct taxes. 

The Reserve Bank of India (RBI) predicted a GDP of 8.5% for this year down from 9% last fiscal. However, the data released by the finance ministry today (4^th July’08) do not seem to corroborate the RBI forecast.

If   this   trend  persists  over  the  next  three   quarters,  the government  would  be  able  to  contain  the  fiscal deficit to within 2.5% to 3% of GDP. According  to economic  circles however,  the  rising  inflation,  interest  rate  hikes  and  high crude prices are likely to put pressure on corporate margins, resulting  in  lesser  growth  in tax collection for the rest three quarters of this year.

This work is licensed under a Creative Commons Attribution 3.0 License.

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