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Friday, May 03, 2002

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Tax receipts in positive phase

Hema Ramakrishnan
Shaji Vikraman


IN a major reversal of trends witnessed over the last couple of years, the Centre's net tax receipts have turned positive in April this year indicating a lower refund payout to corporates.

According to a senior official, net tax receipts stood close to around Rs 5,000 crore in the first month of fiscal 2002-03. This is in contrast to the trends witnessed in previous years where receipts were negative in April and May due to hefty refunds.

After the refund payout, corporate tax collections stood negative at over Rs 1,000 crore in April 2001. Coupled with the shortfall in the realisation from customs, tax revenues in April, last year, witnessed a steep 85 per cent decline over the previous year.

The Centre has budgeted gross tax collections of Rs 2,35,800 crore for the current fiscal, marking a near 20 per cent increase over the revised estimate of Rs 1,96,693 crore. The gross fiscal deficit has been placed at 5.3 per cent of the GDP against 5.7 per cent in the revised estimates.

The process of fiscal consolidation in the current fiscal is envisaged through a higher growth in revenue receipts and a relatively moderate growth in aggregate expenditure.

Of the total tax collections, the mop-up from direct taxes (income and corporate tax) has been budgeted at Rs 91,140 crore against the revised estimate of Rs 73,497 crore for 2001-02.

The realisation from indirect taxes (customs and excise) has been budgeted at Rs 1,36,626 crore as against the revised estimate of Rs 1,17,690 crore during 2001-02.

The revised targets both for direct and indirect taxes were, however, missed with provisional estimates placing the shortfall at around Rs 6,000 crore for direct taxes alone.

The main reason for the gap between the revised estimates of net direct tax collections and actual collections was the hefty refund payout of Rs 17,000 crore. The gap is set to be bridged, to a certain extent, once the tax deducted at source (TDS) is factored in.

Senior Finance Ministry officials reiterate that there is unlikely to be any slippage in the fiscal deficit target in 2001-02, given that the final borrowings are well within the revised estimate. A further compression in expenditure could have also brought about the match between revenue and expenditure. The exact picture will be available by the end of June this year, said officials.

Tax sops needed: Sinha

THE Finance Minister, Mr Yashwant Sinha, said on Thursday that the Government has to allow some tax concessions in the present situation despite India having a moderate tax system where there is not much scope for exemptions.

In his interaction with probationers of the Indian Revenue Service, Mr Sinha advised the officers to be firm and polite in their approach towards taxpayers. This, he said, would result in better compliance of tax norms by the taxpayers besides earning their goodwill.

"Efforts should be made to check tax evasion effectively while ensuring that an honest taxpayer is not harassed in any manner," the Finance Minister said, adding that the Government will continue to lay emphasis on raising the direct tax collections substantially and its share in total revenue.

The Government has targeted a doubling of the assessee base to five crore in two years.

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