Difficult to meet tax targets on subdued profits: Rajan
New Delhi: The government on Monday said it would be difficult to achieve the corporate tax, customs and excise mop-up target as projected in the Budget because of subdued corporate profits.
"On the tax revenue side, the trend growth in the mid- year is lower than estimated... The reason for under achieving target is due to macroeconomic environment being under stress," Chief Economic Advisor Raghuram Rajan said.
"While the targets may be achieved in taxes on income, other than corporation tax and service tax, achieving targets in Corporation tax on the Direct tax side and Customs and Central Excise duty on the Indirect tax side is somewhat difficult given the trend so far," Rajan added.
He was briefing reporters on the Mid-Year Economic Analysis that was tabled in the Parliament today.
Rajan said, "The biggest source of our direct tax is corporate profits. Corporate profit earning is not growing at pace, it was growing in past..."
Net direct tax collection during the April-November period this fiscal grew 15.04 percent to Rs 2,70,731 crore, with nearly three-fifth coming from the corporate sector.
The net corporate tax collection, stood at Rs 1,62,897 crore during the eight months ending November 2012.
Despite slowdown in the economic activity, the government has expressed confidence in meeting direct tax target of Rs 5.70 lakh crore for 2012-13. Direct taxes include income tax, corporate tax and wealth tax.
Indirect tax collection grew by 17 percent to Rs 2.57 lakh crore in the April-October period, as against the annual growth target of 27 percent.
The government in the current fiscal had proposed to collect from customs, excise and services tax Rs 5.05 lakh crore, an increase of 27 percent over the realisation in the previous fiscal.
In the first seven months this fiscal, excise has yielded Rs 95,000 crore, while collection from customs and services tax worked out to be about Rs 92,000 crore and Rs 70,000 crore respectively.
The target for customs collection for 2012-13 was fixed at Rs 1.87 lakh crore, for excise - Rs 1.93 lakh crore and for service tax - Rs 1.24 lakh crore.
India's economic growth has declined to 5.4 percent in the first-half of the current fiscal, from 7.3 percent in the year-ago period.
The government today lowered the growth projection for the current financial year to 5.7-5.9 percent from 7.6 percent estimated earlier.