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The Centre may have to do some heavy lifting on the direct taxes front in the last quarter, going by collection trends till December. Net direct tax collections in April-December 2014 grew just 7.4 per cent, lower than the targeted 15 per cent increase for the entire fiscal.
The Centre is clearly staring at a ‘big hole’, but the gap is not that alarming, said sources privy to the working of the Income-Tax Department.
A strong show is expected in the March instalment of advance tax.
Scrutiny assessments Another positive is that the tax department is likely to conclude scrutiny assessments for 2012-13 by March. These assessments are expected to result in a “tidy pile” for the I-T Department.
It would also be safe to assume that banks, financial institutions and some obliging companies will, as in previous years, park some funds temporarily with the Department.
The Securities Transaction Tax (STT) collections growing 43.44 per cent at ₹4,940 crore in April-December — largely due to the buoyant equity market — should also help bolster overall revenue collections.
For April-December 2014, gross corporate and personal income-tax collections are growing at rates lower than budgeted. In the case of corporate tax, gross collections grew 12.54 per cent for the period under review, at ₹3.50 lakh crore (₹3.11 lakh crore). The budgeted growth rate for the full fiscal was 14.5 per cent.
Growth boost Gross personal income-tax collections grew 12.62 per cent, at ₹1.90 lakh crore (₹1.69 lakh crore). The expected growth rate for the fiscal was 17.6 per cent.
The mid-year economic analysis — a Finance Ministry document released in December last year — had said the Centre could face a potential ₹1 lakh crore revenue shortfall this fiscal.
This may call for some expenditure reduction to meet the fiscal deficit target of 4.1 per cent of GDP for 2014-15.
To revive economic growth, the mid-year analysis also suggests that public investments may have to play a greater role in the coming years to complement private investment. Besides, the upcoming auctions in coal, spectrum, and FM radio waves may come in handy to boost non-tax revenues.
It is also expected that big-ticket disinvestments, including that of IndianOil, Coal India, and NMDC, will materialise in the fourth quarter of this fiscal.
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