Direct tax mop-up for 2009-10 may fall short of target

The government had set the target for direct tax collection at Rs 3.70 lakh crore in the Budget for 2009-10, and later revised it upwards to Rs3.87 lakh crore

The direct tax collection for the financial year 2009-10 is likely to be around Rs3.80 lakh crore, missing the revised target by Rs7,000 crore reports PTI.

"The final figures will be available in mid-May when all the transactions are compiled. As on date it is somewhere around Rs3.78 lakh may be Rs3.80 lakh crore," Central Board of Direct Taxes (CBDT) chairman S S N Moorthy said at an Assocham seminar.

The government had set the target for direct tax collection at Rs 3.70 lakh crore in the budget for 2009-10, and later revised it upwards to Rs3.87 lakh crore.

According to the provisional data, the actual collection of direct taxes, which mainly includes corporate tax and personal income tax, was Rs3.75 lakh crore.

However, minister of state for finance S S Palanimanickam had informed Parliament that the provisional figure of Rs3.75 lakh crore would be revised upwards once the final figures are received.

Speaking at a TDS seminar, Moorthy said that TDS component in direct tax collection is quite substantial. It stood at Rs1.53 lakh crore in the last fiscal, about 40% of the total direct tax collection.

During the current fiscal ending 31 March 2011, the government proposes to mop up Rs4.30 lakh crore through direct tax. Of this, Rs1.28 lakh crore is expected from income tax (I-T), Rs3.01 lakh crore from corporate tax and Rs603 crore from wealth tax.

To enable faster refunds to tax payers, the I-T department plans to open centralised processing centres in Faridabad and Ahmedabad. At present it has only one processing centre in Bangalore.

"We are still at the thinking stage but it is likely to be in Ahmedabad and Faridabad," Moorthy said.


RBI prefers long-term capital inflows: Subbarao

 Governor Subbarao said Tobin tax is not on RBI’s agenda, and the path to full capital account convertibility is being “recalibrated on a dynamic basis”

The Reserve Bank of India (RBI) will liberalise the capital account gradually, keeping in mind lessons from the global credit crisis, and there are no plans to impose Tobin tax to curb currency speculation, governor D Subbarao said.

"Our position is that capital account convertibility is not a standalone objective but a means for higher and stable growth," Subbarao said in a speech delivered at a conference hosted by the Swiss National Bank and the IMF in Zurich on Tuesday.

"As regards a Tobin type tax, we have not so far imposed nor are we contemplating one. However, it needs reiterating that no policy instrument is clearly off the table and our choice of instruments will be determined by the context," he said.

Tobin tax is a transaction tax on currency conversions intended to curb volatility and speculation.

"We believe our economy should traverse towards capital convertibility along a gradual path—the path itself being recalibrated on a dynamic basis in response to domestic and global developments," Subbarao said.
Foreigners have invested a net $6 billion in Indian stock markets so far in 2010, adding to record capital inflows of $17.5 billion in 2009. The inflow has helped the rupee gain about 2.7% this year, after rising 4.7% last year.

Subbarao said the central bank's preference was for long-term equity inflows, rather than short-term debt flows.

"Our policy has been quite stable," he said, referring to emerging economies that had opened up and then tightened rules when flows became volatile.
"Our policy on equity flows has been quite liberal."

Subbarao reiterated the exchange rate is not guided by a fixed or pre-announced target or band.

"Our policy has been to intervene in the market to manage excessive volatility and disruptions to the macroeconomic situation. This volatility-centric approach to the exchange rate also stems from the source of volatility, which is capital flows," he said.










It gets murkier

The New York attorney general has started an investigation of eight banks to find out if they fudged ratings information to inflate the grades of mortgage securities.

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