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Govt optimistic of reversing downtrend in tax collections

Hema Ramakrishnan

NEW DELHI, July 20

THE 12.8 per cent drop in aggregate tax revenues during the first quarter notwithstanding, the Revenue Secretary, Dr S Narayan, is optimistic about reversing the downtrend, particularly in excise and direct tax collections in the coming months.

The optimism stems from the Government's expectation of a recovery in the manufacturing sector and improvement in direct tax revenues. Tighter controls to check excise evasion and misdeclaration of imports and exports too are expected to yield results.

``We expect to mop up at least Rs 3,500-4,000 crore from excise on petro-products whose duties were slashed in September last year but restored to the same level in this year's Budget,'' he told Business Line. Higher excise revenues would also come from CNG and LPG (whose volumes have shot up due to increase in the number of connections).

The Rs 200-300 crore loss incurred due to excise refunds on tobacco products -- including cigarettes, pan masala and gutka -- in the North East too is expected to be made up with production shifting to other places after withdrawal of the duty exemption.

Textiles is another sector where the Government hopes to shore up collections. With the final notification on garments issued at the end of May, the mop up from this sector has improved in June as compared to the first two months of the current fiscal, s aid Dr Narayan.

Besides motor spirit, HSD and textiles, other sectors registering positive growth till the end of May this year included refrigerators and air conditioners, chemicals, cement and cosmetics. In contrast, sectors registering a negative growth till the end of May included crude oil, machinery, iron and steel, motor vehicles and televisions.

With the demand for some core commodities including cement slated to improve, the Revenue Department expects at least 10-11 per cent growth in excise collections in the next quarter.

The same, however, cannot be said about customs collections, which have registered a steep 17 per cent decline due to the sharp fall in non-oil imports.

On the direct tax front, the Revenue Department expects all interventions made in this year's Budget to yield results, including the tax on export incomes. With perquisites being taxed as cost to employer, higher revenues are set to be garnered from tax deducted at source (TDS).

On the corporate tax front, advance tax collections in the first instalment of June 15 increased by about 15 per cent in the first quarter. However, realisation from corporate taxes declined by 63 per cent in the first quarter due to hefty refunds. The G overnment expects better performance in the second instalment due by September 15.

According to the Revenue Secretary, efforts to widen the tax base through the one-by-six scheme which has been extended to 4,560 towns would not only increase the number of assessees by another one crore, but also yield revenues to the tune of Rs 4,000-5 ,000 crore.

The Government has targetted a gross tax revenue of Rs 2,26,649 crore as compared to the revised estimate of Rs 1,98,321 crore in the last fiscal.