FY13 Direct Tax Collection Falls Short By Rs 17000 Crore

In his budget speech, the Finance Minister has said that he hopes to contain the fiscal deficit at 5.2% of the gross domestic product (GDP) for FY13. But this goal has taken a hit as the government’s direct tax collection in 2012-13 has fallen short of the revised estimate by about Rs 17000 crore. This certainly points towards a gloomy economic scenario and the low collection would pose a challenge to the Finance Ministry’s efforts. The Centre’s revenue deficit is also set to miss the RE of 3.9% of GDP.

Data released by the Central Board of Direct Taxes reveals that corporation tax collections in 2012-13 stood at Rs 351724 crore compared to the revised estimate (RE) of Rs 358874 crore and the budgeted estimate (BE) of Rs 373227 crore. Income tax collections fell short of the RE by about Rs 15000 crore. The collections stood at Rs 191323 crore, against the RE of Rs 206095 crore and the BE of Rs 195786 crore. Other Taxes contributed Rs 5798 crore towards direct tax collection. Refunds stood at Rs 82704 crore during 2012-13 as against Rs 95000 crore issued in 2011-12.

For the first 11 months of 2012-13, the Centre’s fiscal deficit touched 97.4% of the RE. The government’s revenue deficit, however, overshot the RE. The government’s fiscal deficit for the April 2012-February 2013 period stood at Rs 5.07 lakh crore against Rs 5.21 lakh crore in the RE, figures released by the Controller General of Accounts showed.

The March 2013 manufacturing PMI came at a 16-month low and a contraction in the 8 core sectors in February clearly points towards sluggishness in economic activities, particularly in the industrial sector. India's economic growth is estimated to fall to a decade low of 5% in 2012-13. The third quarter of the financial year saw growth plummeting to almost a four-year low of 4.5%. The fourth quarter numbers are yet to be released.