Direct tax collections are likely to be higher than the Budget estimate by around Rs 20,000 crore (Rs 200 billion) in 2006-07 on account of the overall buoyancy in the economy and robust performance of corporations.
Consequently, the revised estimate of direct tax collections for 2006-07 was likely to be around Rs 2,30,000 crore (Rs 2,300 billion), compared to the Budget estimate of Rs 2,10,684 crore (Rs 2106.84 billion) for the year, official sources said.
The finance ministry is expected to announce a revised estimate for the current fiscal on February 28.
The Budget estimate of direct tax for 2006-07 is Rs 2,10,684 crore, compared to the actual collection of Rs 1,65,208 crore (Rs 1652.08 billion) in 2005-06. The actual direct tax collections were lower by 6.7 per cent in 2005-06, compared to the Budget estimate of Rs 1,77,077 crore (Rs 1770.77 billion).
The upward revision in direct tax collections for this fiscal will be a significant development for the government, which is likely to increase investments in sectors like agriculture and infrastructure.
The growth in net direct tax collections so far this fiscal has outpaced the targeted growth of 27.5 per cent over the last year as per the Budget estimate for 2006-07.
Direct tax collections shot up 39.7 per cent to Rs 1,61,777 crore (Rs 1617.77 billion) till February 15 this fiscal due to overall buoyancy in corporation and income tax collections.
Corporation tax collection rose 45.2 per cent at Rs 99,488 crore (Rs 994.88 billion) during the period compared to Rs 68,534 crore (Rs 685.34 billion) in the same period last fiscal.
The higher growth in tax collections is a combination of robust profitability of corporations and reduction in assessment period for companies from 36 months to 33 months, say tax consultants.
Income tax collections were up by 32 per cent at Rs 62,040 crore (Rs 620.4 billion) till February 15 this fiscal, as against Rs 46,986 crore (Rs 469.86 billion) collected in the
same period in 2005-06.
Income tax collections include fringe benefit tax, securities transaction tax and banking cash transaction tax.
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