Robust increase in corporate and personal income-tax collection
Interest rate regime also helps fiscal consolidationCurrent revenues turn positive
NEW DELHI: The Economic Survey on Tuesday projected that the revenue collection target set for the current fiscal is likely to be exceeded, owing to a healthy growth in mop-up through direct taxes.
With robust increases of 55.2 per cent and 30.3 per cent in corporate and personal income-tax collection, during April-December 2006, this alone would account for more than 47.6 per cent of the total revenue budgeted for 2006-07, the survey noted.
As compared to corporate and personal I-T growth of 20.3 per cent and 22.7 per cent during the April-December period of 2005-06, the Centre's gross tax receipts in the same period this fiscal rose by 32.8 per cent while the assumed growth rate in the Budget was much lower at 19.5 per cent, the survey said.
Till December 31 last , the Centre succeeded in mopping up 69.3 per cent of the budgeted target set at Rs. 4,42,153 crore. For the buoyancy in tax collection to continue, the survey stressed the need of strengthening the administrative machinery for booking tax evaders.
In this regard, the survey advised the Government to build a comprehensive database of taxpayers, the tax paid, their income and transactions in asset markets and subsequently link it with the scrutiny and assessment process.
The survey pointed out that apart from the buoyant direct tax collections, the benign interest rate regime also helped in fiscal consolidation. The Centre's tax-GDP (gross domestic product) ratio, it said, had increased steadily from 8.8 per cent in 2002-03 to 10.3 per cent in 2005-06 and budgeted at 11.2 per cent in 2006-07.
Moreover, the buoyancy in revenues was complemented by a discernible shift in the composition of expenditure, the Survey said.
While the total expenditure of the Centre as a percentage of the GDP declined from 16.8 per cent in 2002-03 to 14.1 per cent in 2005-06, the gross budgetary support to the Plan rose on a like-to-like basis from Rs. 111,470 crore to Rs. 172,500 crore, it said.
Also, the balance from current revenues that had remained negative till 2003-04 turned positive in 2004-05 and further strengthened to Rs. 23,332 crore in 2005-06. Besides, the non-Plan spending, as a proportion of total expenditure, also declined from 73 per cent in 2002-03 to 69.4 per cent in 2006-07. This, the survey said, indicated lesser dependence on borrowed funds and private savings.