Net direct tax collections are likely to grow at a much slower rate of 5-7 per cent in the current fiscal 2009-10 because of the global economic crisis adversely affecting the Indian economy, said a senior finance ministry official.
''It would be very difficult to achieve growth this year due to the ongoing global financial meltdown. However, focusing on investigating approach that we adopted last fiscal would help us reach the target of Rs360,000 crore,'' revenue department secretary P V Bhide said in Nagpur on Monday.
At this level, the new estimate by the revenue department is nearly Rs 20,000 crore less than earlier target fixed in the interim budget 2009-10. Even to achieve this growth, the revenue department is planning to tighten tax deducted at source (TDS) enforcement and also increase scrutiny of tax returns filed with the department.
The direct tax collection during the last fiscal year 2008-09 was to the tune of Rs337,000 crore crore against Rs312,000 lakh crore in financial year 2007-08. "The tax collection was, however, short of budgetary estimates of Rs345,000 crore. Similarly, the indirect tax collection was Rs265,000 crore as against Rs281,000 crore in previous year, Bhide told reporters.
Bhide, who was in Nagpur to attend the passing out of the 61st batch of Indian Revenue Service officers at the National Academy of Direct Taxes (NADT), said the cut in duty taxes reduced the indirect tax collection.
Property deals under scanner
The tax department has identified property transactions as one focus area to increase their collections. It has been noticed that capital gains tax is often not paid even on the registered value of the property, Bhide said.
Income Tax authorities are now trying to map the property transactions from the local authorities and see whether tax has been paid on them or not. This exercise is likely to yield revenues, but a number could not be quantified, he said.
The department is also looking at capital gains made when a property is taken over under land acquisition. Here, too, it was found that in many transactions tax have not been paid.
Earlier, the revenue department found many realtors misusing Section 80 IB provisions that deal with exemption for developing homes for the poor. Many firms had violated this provision and the department had raised tax demand on such violations.
Apart from these, the I-T Department is planning to continue the best practices that yielded results in fiscal 2008-09. Among them is checking whether companies that have deducted tax under TDS have actually paid the tax to the I-T Department or not.
Last fiscal, the department was able to identify more than 100,000 cases of unpaid TDS in one quarter, Bhide said.
A list of top 1,000 TDS payers has been prepared under both corporate and direct tax heads. From this list, the I-T Department would look out for firms that do not come in the top 1,000 list and scrutinise those companies for underpayment.
Earlier, speaking at the valedictory function of the induction course of the 61st NADT batch, Bhide called upon the young officers to be honest and strive for better tax administration, though their primary responsibility is tax collection.
Treat the income tax assessee as a client and not a criminal, he advised. The new tax code was being readied and would be brought in soon, he said.
Chairman of the central board of direct taxes S S N Moorthy and director general of NADT, N P Singh were among the other officials present.