Fisc comes of age: Direct tax mop-up outstrips indirect’s

Indian tax receipts have finally moved into the league of developed economies.

Indian tax receipts have finally moved into the league of developed economies. A buoyant direct tax mop-up, increasing at over 40 per cent this fiscal, has for the first time left the indirect tax collection behind.

The direct tax collection (excluding refunds) until December 2007 crossed the Rs 2,05,000-crore mark, registering growth of 42.36 per cent. Pleased with the rapid rise, finance minister P Chidambaram on Tuesday said, “If the buoyant collection continues and voluntary compliance improves, then there is a case for moderation of tax rates.” The minister would present the Budget for 2008-09 in another eight weeks. He also said, there would be a new adviser in place of Parthasarathi Shome, who resigned on Friday.

Chidambaram stressed that better tax compliance was essential if the rates of direct taxes had to move southwards. But he parried questions on the trend for the coming Budget. He also said, the high growth in direct tax collection would help the government exceed the targeted 11.8 per cent tax-GDP ratio for 2007-08.

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Corporate tax collection during April-December 2007 rose by 39.84 per cent to Rs 1,27,683 crore, and personal income tax, including the security transaction tax, fringe benefit tax and banking cash transaction tax, grew by 50.06 per cent to Rs 77,380 crore.

Tax code ready

NEW DELHI: The FM plans to release the direct tax code, the omnibus review of tax laws, along with a discussion paper. “The code is ready as of yesterday,” he said, adding that he was currently working on a draft discussion paper. The discussion paper would explain the reasons for writing the code and the rationale for these changes, he added.

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