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Tax mop-up to fall short of target by Rs 45 billion

Santosh Tiwary & P Vaidyanathan Iyer

Tax collection in the current financial year is likely to fall short of the revised estimates by Rs 45 billion to Rs 60 billion, according to the initial revenue realisation trends witnessed in March.

However, the shortfall would be met more by a squeeze in expenditure than additional market borrowings by the government. The fiscal deficit target of 5.1 per cent in all probability will be met through better expenditure management and lower than targeted borrowings, officials said.

Expenditure secretary CM Vasudev said that no more borrowings were scheduled now. With yesterday's Rs 30 billion auction of the 2015 paper by the Reserve Bank of India, the government's market borrowings comes to a close having raised Rs 1151.83 billion against the revised borrowings target of Rs 1192.68 billion.

"With actual borrowings much less than the revised targets, we are much better off," said Vasudev. The borrowings for the year are less than Rs 38.95 billion from the revised targets and over Rs 25 billion from the budgeted market borrowings of Rs 1177.04 billion. Even the total expenditure has been pruned by over Rs 29.50 billion to Rs 3355.23 billion.

Sources said that the shortfall in direct tax collection was expected to be around Rs 4o billion. On the indirect tax side, they said that trends up to March 15 suggested that there would be a shortfall of between Rs 20 billion to Rs 30 billion, mainly from the excise duty side.

The revenue department, however, has taken specific steps to improve revenue realisation in the second fortnight of March to minimise the shortfall by collecting additional tax which can be anything in the range of Rs 10 billion to Rs 25 billion.

Officials noted that a lot would depend on the results of extra effort put in by the department to improve tax mop-up during this period. Sources, however, pointed towards the enormity of collecting Rs 245 billion direct tax in March alone with the trends suggesting that it would be difficult to cross Rs 200 billion mark in the month.

The direct tax collection in March last year was around Rs 180 billion. The shortfall in direct tax has been mainly due to the Gujarat earthquake and economic slowdown, said officials.

On the indirect tax side, about Rs 111.73 billion collection has to come from excise duty in March 2001 to meet the revised estimate of Rs 706.81 billion for the current fiscal, and Rs 71.63 billion needs to be collected in March this year from customs duty. Sources said that the initial figures of tax collection from indirect taxes up to March 15, indicated towards a shortfall of 2-3 per cent or Rs 25 billion to Rs 30 billion from revised estimate. The Central Board of Excise and Customs has hence asked the assessees to clear their backlogs and inventory by March 31.

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