Wednesday, December 26, 2007

Direct taxes surpass indirect tax revenues

Direct taxes surpass indirect tax revenues

K.R. Srivats

For the first time, the Centre’s net direct tax collections have surpassed its indirect tax receipts, going by the latest tax revenue mobilisation data available with the revenue department.

Official sources said that the net direct tax collections have as on date in the current fiscal crossed the Rs 2 lakh-crore threshold. Direct tax collections have been registering hefty growth rates of over 40 per cent this fiscal, ramping up expectations that direct tax receipts would exceed indirect tax revenue some time during 2007-08.

Up to end-November this fiscal, customs and excise duty collections had cumulatively touched Rs 1,41,851 crore. Service tax collections up to October this year stood at Rs 25,420 crore. Even factoring in indirect tax receipts of about Rs 20,000-25,000 crore for December 2007, the overall collections would be lower than the Rs 2 lakh-crore mark achieved till date, say Finance Ministry officials.

According to analysts, direct tax collections exceeding indirect tax revenues is the hallmark of a progressive taxation system since indirect taxes like excise are paid by poorer sections of society on par with a higher income earning individual. In 1990-91, less than a fifth of the Centre’s gross tax revenues came from direct taxes. Now direct taxes account for almost 50 per cent of the Centre’s gross tax revenues.

Sources said that advance direct tax collections in the December 15 instalment has been quite strong and this had helped the total collections cross the Rs 2 lakh-crore mark. Only three private sector companies —Tata Steel, Reliance Industries and ICICI Bank — figure in the top ten advance tax payer league.

The top ten advance income tax payers in the country have cumulatively up to December 15 this year forked out 30 per cent more at Rs 22,196.7 crore.

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