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New Delhi, Dec. 26: Advance tax collections from companies have dropped 22 per cent to Rs 42,600 crore in the April-December period from Rs 54,900 crore in the year-ago period.

The huge fall in collections is being attributed to the slowdown in the economy. The declining collection plus a higher government spending to stimulate the economy are straining the Centre’s finances.

Its off-budget spending — a Rs 71,000-crore farm loan write-off, a Rs 22,000-crore pay hike for civil servants, Rs 20,000-crore extra spending in new infrastructure projects and a Rs 8,700-crore tax sop to industries — could push up the budget deficit to 5 per cent of the country’s GDP.

The government may soon clear a second stimulus package to revive the economy, whose growth is expected to slow down from an average of 9 per cent in the last two years to about 7 per cent this year.

Top North Block officials said, “The only way to manage the books in this kind of a situation is to increase borrowing and the government is doing so.”

Advance tax is paid by companies and individuals on projected incomes. Companies and partnership firms pay taxes in four instalments on June 15, September 15, December 15 and March 15.

Individuals pay in three instalments — September 15, December 15 and March 15.

Officials said they would probe the low advance tax filing to check whether companies were declaring a lower income because of the slowdown.

However, income tax analysts said there was nothing to probe as the advance tax payouts were merely based on projections. “The difference between projections and actuals, if any, have to be paid by companies at the end of the year.”

Overall advance taxes were down 2.6 per cent to Rs 1,13,000 crore till December in the current financial year compared with Rs 1,16,000 crore in the corresponding period last fiscal.

Direct tax collection in November had gone down over 35 per cent compared with the same month last year.

From April to December 24, it was up 11.5 per cent to Rs 2,32,000 crore from Rs 2,08,000 crore a year ago.

Corporate taxes rose 15.3 per cent to Rs 1,50,000 crore from 1,30,000 crore.