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Govt has few answers for revenue shortfall

BS Economy Bureau

The government said its indirect tax collections in the current fiscal would fall below the target of Rs 1,401.42 billion and acknowledged it would only manage to "surpass last year's performance".

On the direct tax front, though collections have been less than 56 per cent of the entire year's target the government feels the position is "quite satisfactory".

In an unusual statement issued just five days ahead of the Budget, the government elaborated on why it was faced with such a shortfall and pinned its hopes on revenue collections in February and March to make up for the shortfall, especially in indirect taxes.

The release says, till the end of January, total indirect tax collections (excluding service tax) have touched Rs 892.93 billion, which is 65 per cent of the Budget estimate of Rs 1,365.42 billion.

Of this, excise accounts for Rs 560.05 billion and customs accounts for Rs 332.83 billion. Excise collections in January at Rs 67.76 billion are, however, 17.5 per cent more than in January last year.

Even in direct taxes, heavy refunds have ensured just about 56 per cent, or Rs 472.87 billion, of the target of Rs 848 billion was met till end-January.

While the gross tax receipts stood at Rs 604.49 billion by end-January, high refunds of Rs 131.62 billion resulted in net direct tax receipts remaining flat at Rs 472.87 billion as against Rs 471.67 billion during April-January last fiscal.

The detailed three-page release recounts the various initiatives taken by the revenue department in the course of the year to arrest declining revenues.

These include, "an unprecedented level of monitoring at the highest level to collect the revenue due to the exchequer" and taking up a large number of cases for scrutiny.

The finance ministry has made an attempt to ward off criticism over laxity in collection efforts. Accordingly, it says, the major reasons for the fall in the growth rate of revenue collection were the economic slowdown, reduction in duty rates, revenue foregone on account of drawback and other export promotion schemes.

It goes on to add "the government is monitoring the performance of field formations on a monthly basis to augment revenue collection and to improve the image of the customs department". It says the stringent measures have yielded about Rs 6 billion as additional revenue.

The release on direct tax says in the first 11 months of the current fiscal, the revenue department added 3.395 million new assesses which, the ministry claims, has resulted in higher income tax collection.

Surveys conducted in Mumbai and Delhi have thrown up cases of defaults in the deduction of tax involving substantial revenue. More such surveys are being conducted, it says. The department has also taken steps to ensure the speedy disposal of appeals before the commissioners of income tax.

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