The revenue projections in the budget are highly optimistic
and out of line with the historical patterns of tax buoyancy,
according to an analysis by Crisil.
its analysis of the budget numbers, Crisil fears the expected
growth rate of 24.64 per cent in tax revenues is an area
budget plans to mop up additional tax revenues of Rs 62,800
crore, a large part of which is contingent on growth in
corporate turnover and profits.
the last eight years, the government has been able to
meet or exceed its budget estimates of tax revenues only
twice, in 1996-97 and in 2003-04.
on both occasions, the corporate sector had reported a
robust growth in sales and profits which bailed out the
substantial contribution to this year''s surge in tax revenues
is expected to come from early settlement of tax arrears.
expectation of gross tax revenues of Rs 3,17,733 crore
hinges on hopes that net tax revenue will grow by 24.64
per cent in fiscal 2004-05. Historically, the government''s
net tax revenues have been growing at an average growth
rate of 10 per cent.
the Rs 1,09,199 crore target for excise duty collections
in 2004-05 is likely to be achieved, the Crisil report
said. In the past, excise duties accounted for 10.2 per
cent to 10.5 per cent of the gross sales revenues of the
sales growth continued at over 10 per cent year on year,
the aggregate sales of the manufacturing sector may well
cross over Rs 10,000,00 crore in 2004-05.
2003-04, the targeted corporate tax collection has never
been achieved in the past. The budgeted tax collection
of Rs 88,436 crore for the current year, which also includes
the turnover tax, is quite ambitious. The budget expects
corporate tax grow at 40.4 per cent.
the tax collections of listed companies, accounting for
65 per cent of the total corporate tax collection in 2003-04,
rose 18.7 per cent in 2003-04.
turnover tax, which expects to yield Rs 7,500 crore this
play a spoilsport. In such a case there will be shortfall
of Rs 12,000 crore if the growth rate of 40 per cent in
tax collections is not achieved.