Direct tax collections fell Rs 6,000 crore (Rs 60 billion) short of the government's Rs 3.45 lakh crore (Rs 3.45 trillion) target for 2008-09 fiscal, as corporate earnings were badly hit by a slowing economy.
This was despite the government lowering the collection target from Rs 3.64 lakh crore (Rs 3.64 trillion) to Rs 3.45 lakh crore (Rs 3.45 trillion) to allow for the dent the economic crisis could make on its revenues.
Corporate tax, one of the main components of direct taxes, stood at Rs 2.13 lakh crore (Rs 2.13 trillion), woefully short of the revised estimates of Rs 2.22 lakh crore (Rs 2.22 trillion), while personal income tax beat expectations by ringing in Rs 1.24 lakh crore (Rs 1.24 trillion) against the target of Rs 1.23 lakh crore (Rs 1.23 trillion).
"Net direct tax collections during the fiscal 2008-09 stands at Rs 3,38,212 crore (Rs 3,382.12 billion) during 2007-09," an official release said. The collections were up 8.33 per cent from Rs 3,12,202 crore (Rs 3,122.02 billion) in 2007-08 fiscal, it said.
In the personal income tax segment, fringe benefit tax collections grew by 12.38 per cent to Rs 7,997 crore (Rs 79.97 billion) in 2008-09 against Rs 7,116 crore (Rs 71.16 billion) in the previous fiscal.
However, dampening stock markets led to decline in the securities transaction tax collections by 36.95 per cent to Rs 5,408 crore (Rs 54/08 billion) against Rs 8,577 crore (Rs 85.77 billion) in 2007-08.
"The collection shortage will create a further pressure on the government to take up the challenge of fiscal deficit," law firm Amarchand Mangaldas' tax expert Aseem Chawla said.
The government should focus on widening the tax base in stead of tinkering with the tax rates, he added.
Asked if the collections could improve this fiscal, Chawla said that he would not speculate but the trend of lower tax collections is likely to continue for the next quarters.
The government has projected direct tax collections to grow to Rs 3.79 lakh crore (Rs 3.79 trillion) this fiscal.
On its part, the government statement said that despite economic slowdown and substantial relief to the non-corporate taxpayers, direct tax collections exceeded the previous year's collections by about Rs 26,000 crore (Rs 260 billion).