HEALTHY NUMBERS

New Delhi, July 4: The country’s corporate and personal tax collections grew at the rate of 32.65 per cent and 48.84 per cent, respectively, in the first quarter of this fiscal.

The Reserve Bank has forecast a GDP growth rate of 8.5 per cent, down from last year’s 9 per cent. Many independent analysts, including the Asian Development Bank, expect the growth to slow down to 7.6 per cent.

However, data released by the finance ministry today belied such predictions. Direct tax collections rose to Rs 57,373 crore in the first quarter of this fiscal from Rs 41,391 crore in the year-ago period.

“The growth in direct taxes has been maintained despite much larger refund payouts at Rs 11,578 crore against Rs 7,302 crore during the corresponding period last fiscal,” a finance ministry statement said today.

However, analysts said this did not mean tax collections would remain robust throughout the year. “There would be pressures on corporate margins with interest rates going up and a fuel spike. This will be reflected from the second quarter and the fourth quarter will take the maximum hit,” said D. Joshi, chief economist with rating agency Crisil. “There can be no way that either corporates or the government’s revenues can be insulated from inflationary pressures,” Joshi added.

Despite the inflationary hiccups, robust tax collections are expected to help the government in keeping the fiscal deficit nearer its objective of 2.5 per cent. However, rising food and fertiliser subsidies, the loan waiver for debt-ridden farmers and an expected hike in salaries and wages of civil servants are expected to push the deficit upwards. N.R. Bhanumurthy, an economist with the Institute of Economic Growth, said, “The fiscal deficit may be wider at 3-3.5 per cent of GDP.”

Finance minister P. Chidambaram has already asked the Central Board of Direct Taxes to revise the budget estimate of Rs 3,65,000 crore upwards to Rs 4,00,000 crore for the whole year. Last fiscal, the government had mopped up revenues worth Rs 3,14,000 crore on account of collections from direct taxes.

During the first three months, corporate taxes have grown 32.65 per cent to Rs 34,566 crore from Rs 26,058 crore in the first quarter of the last fiscal, the ministry release said.

Personal income tax, including fringe benefit tax (FBT), securities transaction tax (STT) and banking cash transaction tax (BCTT), increased 48.84 per cent to Rs 22,782 crore from Rs 15,306 crore a year ago.

FBT collections were up 38.74 per cent, while STT and BCTT grew at 22.11 per cent and 21.03 per cent, respectively.

In Mumbai and Delhi, direct tax collections grew 40.19 per cent and 53.57 per cent, respectively. Other regions with high tax growth were Nagpur (74.08 per cent), Kochi (68.08 per cent), Bangalore (47.26 per cent) and Calcutta (45.30 per cent).

Officials said tax deducted at source continued to drive direct tax collections with a growth rate of about 50 per cent, while self-assessment tax grew at 35 per cent, reflecting continued improvement in tax compliance and administration.