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Journalism of Courage
A goof-up by companies in filing corporate tax after the introduction of a single challan system depressed collection figures and irked the Finance Ministry, which was fast to detect the mistake running into Rs 6,120 crore.
The Ministry scrutinised the figures as it was intrigued by the sluggish 5.6 per cent growth in corporate tax mop up, despite an impressive industrial growth and hefty profits netted by India Inc.
The goof-up occurred as many companies by mistake ticked income tax instead of corporate tax, in the single challan system that was introduced this year, for both income and corporate taxes, official sources said on Friday.
The Finance Ministry was fast to correct the figures and corporate tax collections now showed Rs 26,223 crore till September, after Rs 6,120 crore, wrongly shown as accruals in income tax, was added to the corporate tax kitty.
The correction ensured that corporate tax growth stood at a robust 38 per cent, instead of the sub-normally low 5.6 per cent in the first half of this fiscal.
The correction, however, brought down the income tax figures, which had earlier shown an astronomical growth of 74 per cent, at Rs 25,117 crore, Rs 6,120 crore higher than the actual figure.
The corrected figure of income tax stands at Rs 18,997 crore till September, showing a growth of 31.54 per cent from Rs 14,442 crore in the year ago period.
The overall growth in direct taxes shown was more or less same, at 35.21 per cent (Rs. 45,220 crore) in the first half of 2004-05. The overall tax collection grew by 19 per cent, to over Rs 1,14,700 crore in first half of this fiscal.
While direct taxes grew by a robust 35.21 per cent, the indirect tax mop up was sluggish at 9.5 per cent during April-September 2004-05, sources said.
The excise mop up stood at Rs 44,463 crore till September this fiscal, which is 10.3 per cent higher than Rs 40,409 crore in the year ago period, he said.
Customs collections were at Rs 25,148 crore in the first six months of 2004-05, up by 8.5 per cent from Rs 23,167 crore in the year ago period.
The excise and customs collections totalled Rs 69,611 crore during April-September 2004, which is 9.5 per cent higher than Rs 63,576 crore in the same period last fiscal.
As against the Finance Ministry’s estimate of 40 per cent growth in the first half, the actual tax collection was less than 20 per cent.
An official said the tax mop up would pick up in the second half of 2004-05, on account of the Securities Transaction Tax (STT) and Service Tax on new items. The service tax, whose rate was hiked to 10 per cent and extended to eight new items, came into effect from September, while STT was effective from October.
The indirect tax mop was lower than expected, as both excise and customs collections fell short of targets after the duty cuts on petroleum, steel, polymers and other items to check inflation, sources said.
