Record refunds pull down tax collections 48

CBDT has issued refunds worth R37,451 cr in the first two months of this fiscal.

A record increase of 216.74 per cent in tax refunds brought cheers to lakhs of taxpayers but took a toll on the net direct tax collections,which plummeted by around 48 per cent during the first two months of the current fiscal.

According to a finance ministry statement,even though the gross direct tax collections during April-May were up 37.34 per cent at Rs 50,405 crore as against Rs 36,702 crore during the corresponding period last fiscal,net collections were down 47.93 per cent at Rs 12,954 crore. Net collections stood at Rs 24,878 crore during the same period in 2010-11.

Continuing its tax refund drive,the Central Board of Direct Taxes CBDT issued refunds worth Rs 37,451 crore in the first two months of the current fiscal as against Rs 11,824 crore during the same period last year. More than 40 lakh refunds had been issued in the current fiscal. Last fiscal,a record 85 lakh refunds had been issued by the department even while it met the revised estimates target of Rs 4,46,000 crore, the statement said.

Despite a fall in net collections,the finance ministry maintained that the fiscal deficit target of 4.6 per cent of the GDP for the current year will not go awry. For the finance minister containing fiscal deficit is very important. He Pranab Mukherjee says the fiscal deficit should be contained at 4.6 per cent. So we will all work towards that, Department of Economic Affairs secretary R Gopalan said.

He added that the revenue collection this year is expected to be less this year. Our assessment or estimation of the growth in revenue this year is less than that of the last fiscal 8230; As regards expenditure,we will try and maintain it at the level which we had provided in the Budget, he said.

The fiscal deficit stood at 4.7 per cent of GDP during 2010-11,much lower than the revised estimate of 5.1 per cent on the back of better revenue realisation and expenditure cuts. The deficit stood at Rs 3,69,043 crore for the fiscal ended March 2011,constituting 4.69 per cent of the GDP. Budget estimates for direct tax collections for the current fiscal is about Rs 5.33 lakh crore.

The key to this dramatic change in the issue of refunds has been the electronic filing and processing of returns that is fully functional since April 2010.

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Finance secretary Sunil Mitra had also voiced the same concern last month. He had cautioned that the ongoing refunds drive,high inflation and moderating economic growth could result in lower than estimated tax collection. Inflation can affect domestic demand and thereby adversely affect GDP growth8230; and consequently our tax collection, he said.

With Agencies

Taxing times

Net direct tax collections during April-May were down 47.93 per cent at Rs 12,954 crore as against Rs 24,878 crore during the same period in 2010-11

Gross direct tax collections during April-May were up 37.34 at Rs 50,405 crore as against Rs 36,702 crore during the corresponding period last fiscal

Despite the fall in net direct tax collections,the finance ministry maintained that the fiscal deficit target of 4.6 of the GDP for the current year will not go awry