The Hindu Business Line : Direct tax collections up 50% in Apr-Aug

Upward trend
Net corporate tax collections increased by 70.37 per cent during April-August 2006 to Rs 22,587 crore (Rs 13,528 crore during April-August 2005).
Income tax collections (including fringe benefit tax, securities transaction tax and banking cash transaction tax) have gone up by 32.91 per cent to Rs 20.330 crore (Rs 15,296 crore).

THE CBDT Chairperson, Ms M.H. Kherawala, presenting a report on `Simplification of the Income-Tax Act 1961' to the Finance Minister, Mr P. Chidambaram, in the Capital on Friday. — Ramesh Sharma

New Delhi , Sept. 8

Reflecting strong growth momentum in the economy, the Centre's net direct tax collections surged by 50 per cent in the first five months of the current fiscal to Rs 42,917 crore as compared to Rs 28,554 crore in the same period last year.

Stating that the revenues of the Centre are buoyant, the Finance Minister, Mr P. Chidambaram, told reporters that net corporate tax collections increased by 70.37 per cent during April-August 2006 to Rs 22,587 crore (Rs 13,528 crore during April-August 2005).

On the other hand, income tax collections (including fringe benefit tax, securities transaction tax and banking cash transaction tax) have gone up by 32.91 per cent to Rs 20.330 crore (Rs 15,296 crore).

Indirect tax revenues of the Centre grew by 23.82 per cent in April-July 2006 to Rs 75,353 crore (Rs 60,854 crore)

Check on inflation

The Finance Minister expressed confidence that the economic growth in Q1 and Q2 of 2006-07 would be near 8 per cent. He also said that efforts would be taken to strike a balance between inflation control and maintaining growth momentum. "Monetary policy is aimed at controlling inflation. At the same time, we are concerned about growth," he said. Mr Chidambaram said that inflation would be contained at 4.5-5 per cent and further efforts would be made to bring down the rate in due course to below 4 per cent. "We will not hesitate from taking monetary as well as fiscal steps to control inflation," he said.

The Finance Minister also said he was confident that the fiscal deficit would be maintained at the budgeted level of 3.8 per cent of GDP and the revenue deficit at the budgeted level of 2.1 per cent of Gross Domestic Product (GDP). Mr Chidambaram met financial advisors of various Central Ministries on Friday and urged them to keep expenditures within the budget.

Asked whether the Government plans to curtail expenditure to meet fiscal deficit targets, he replied in the negative.

On foreign direct investment, Mr Chidambaram said he expected the FDI inflows this year to be higher than the $5.548 billion received in 2005-06.

Capital account convertibility

Asked about the Tarapore Committee recommendations on fuller capital account convertibility, the Minister said he was yet to read the entire report. He, however, said that status quo would be maintained on the policy on participatory notes until a view is taken on the Tarapore Committee report. Mr Chidambaram said the Government "broadly" accepted the Lahiri Committee report.

On the recent increase in interest rates on home loans and personal loans, Mr Chidambaram said this would act as a "necessary dampener", but the idea was not to choke growth in these sectors.

The Finance Minister also made it clear that there was no case for raising interest rates on small savings and pointed out that States were not clamouring for any increase in such rates.

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