Finance Minister Jaswant Singh may do away with the 2.5 per cent surcharge on corporate tax and the 10 per cent surcharge on income tax for individuals earning over Rs 8.5 lakh (Rs 850,000) a year, in the Budget for 2004-05.
According to finance ministry sources, these surcharges are expected to contribute about Rs 3,000 crore (Rs 30 billion) this fiscal, and the exchequer can absorb the impact of their withdrawal given the buoyant direct tax collection.
The sources said a final decision on eliminating the surcharge would be taken after a review of the tax collection at the end of the third quarter.
The latest figures for direct tax collection show that the Centre is likely to exceed the Rs 95,569 crore (Rs 955.69 billion) target for this fiscal by at least Rs 5,000 crore (Rs 50 billion).
The gross revenue of the Centre touched Rs 62,171 crore (Rs 621.71 billion) during April-November this year, which is Rs 10,804 crore (Rs 108.04 billion) more than in the same period last year.
With refunds of Rs 19,554 crore (Rs 195.54 billion), the net direct tax revenue during April-November, 2003-04, was Rs 42,617 crore (Rs 426.17 billion), which is 44.2 per cent of the Budget estimate and nearly 18 per cent more than the Rs 36,226 crore (Rs 362.26 billion) realised during April-November, 2002-03.
The growth rate of direct tax is above the Budget estimate of 17.6 per cent.
Of the net collection, corporate tax accounts for Rs 21,952 crore (Rs 219.52 billion), which is 42.6 per cent of the Budget estimate.
The Centre will earn another 15 per cent of the corporate tax in one go from the third installment of advance tax by December 15.
Income tax collection in the first eight months of the fiscal touched Rs 20,586 crore (Rs 205.86 billion), which is 46.7 per cent of the Budget estimate.
The total refunds this fiscal have climbed to Rs 19,554 crore (Rs 195.54 billion) from Rs 15,141 crore (Rs 151.41 billion) last year.
Of this, corporate tax refunds are Rs 14,287 crore (Rs 142.87 billion), while income tax refunds are Rs 5,155 crore (Rs 51.55 billion).
