The government would fall short of its target for direct tax collections for the second consecutive year, with the revenue department estimating its direct tax receipts at Rs 3,70,000 crore (Rs 3700 billion) for 2009-10.
While the estimated figure will meet the original Budget estimate, it would miss the revised target of Rs 3,87,000 crore (Rs 3870 billion) announced on February 26. Direct tax collections at the end of February stood at Rs 2,78,373 crore (Rs 2783.73 billion).
This required the Central Board of Direct Taxes (CBDT) to collect Rs 1,08,627 crore (Rs 1086.27 billion) in the last month of the year to meet its revised target.
"As on March 13, the direct tax revenue stood at Rs 3,07,000 crore (Rs 3070 billion). In the last two years, we have collected over Rs 80,000 crore (Rs 800 billon) in the month of March. This could go up by 10 per cent this year to Rs 88,000 crore (Rs 880 billion). So we can reach around Rs 3,70,000 crore," a CBDT official told Business Standard.
In 2008-09, the government had collected Rs 2,58,000 crore (Rs 2580 billion) in direct taxes till February.
It added Rs 80,000 crore (Rs 800 billion) in March to take the total to Rs 3,38,000 crore (Rs 3380 billion). Similarly in 2007-08, it collected Rs 2,32,000 crore (Rs 2320 billion) till February and added Rs 80,000 crore (Rs 800 billion) in the last month to close the year at Rs 3,12,000 crore (Rs 3120 billion).
Out of the Rs 29,000 crore (Rs 290 billion) collection in taxes so far in March 2010, about Rs 14,000 crore (Rs 140 billion) would count towards TDS (tax deducted at source) deposited in February but deducted in the first week of March.
The remaining Rs 15,000 crore (Rs 150 billion) is the advance tax collected till March 13. TDS receipts for March, to be collected in April, are estimated at Rs 18,000 crore (Rs 180 billion), while the advance tax for the rest of the month is likely to be around Rs 45,000 crore (Rs 450 billion), taking the total to Rs 3,70,000 crore (Rs 3700 bllion).
"Tax collections typically happen by March 15. Some tax is now being collected in the form of arrears. I think the government will be pretty close to the target," said Ajay Kumar, executive director, PwC.
Last year also the government had missed its target of Rs 3,45,000 crore (Rs 3450 billion) due to the economic slowdown, but this year it was betting on direct tax collections to make up for any shortfall in indirect tax receipts.
As the economy started showing signs of recovery this year, Finance Minister Pranab Mukherjee increased the target to Rs 4,00,000 crore (Rs 4000 billion), which was later brought down in the Budget.
The official said the government was expecting a good show on the advance tax front in the last quarter, but "as the finance minister has pointed out the recovery is not broad based".
During the month of February 2010, direct tax collections grew 27.54 per cent to Rs 14,675 crore (Rs 146.75 billion). In January 2010, however, tax collections had fallen by 19.84 per cent.
In a bid to meet its revenue collection targets, CBDT had recently decided to monitor advance tax payments of top companies and persuade them not to defer such payment as self-assessment tax for the next financial year.
