If increasing subsidy bill is giving headache to P Chidambaram, he has found succour in higher direct tax collections. Direct tax receipts from companies and personal income have reportedly, increased 71.3% (ET June 19) in the first two months of the current year compared to the same period last year.
This may be too early to predict the collections for the full year, but if one goes by past records the finance minister has every reason to be optimistic. After all, rationalisation of tax structure has been giving good dividends. Despite a fall in tax rate, collections of corporate tax have increased steadily.
An ET survey of 200 large companies finds that their aggregate tax provisions have increased 28.3% in 2007-08 over the previous year.
The bigger question, however, is: Does a rise in tax collections automatically imply success of the restructuring process of corporate taxation? After all, higher tax collections last year could be the result of higher profits. As demand picked up following improvement in macro fundamentals, India Inc witnessed an all-round prosperity.
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This may be too early to predict the collections for the full year, but if one goes by past records the finance minister has every reason to be optimistic. After all, rationalisation of tax structure has been giving good dividends. Despite a fall in tax rate, collections of corporate tax have increased steadily.
An ET survey of 200 large companies finds that their aggregate tax provisions have increased 28.3% in 2007-08 over the previous year.
The bigger question, however, is: Does a rise in tax collections automatically imply success of the restructuring process of corporate taxation? After all, higher tax collections last year could be the result of higher profits. As demand picked up following improvement in macro fundamentals, India Inc witnessed an all-round prosperity.
Read More Article...
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