IT returns to increase by Rs 5,060cr in FY07-08

New Delhi, July 13: Revenue collections through personal Income-tax to Finance Ministry is likely to rise by Rs 5,060 crore in fiscal 2007-08 to touch Rs 87,570 crore compared to Rs 82,510 crore last year.

The number of income-tax payees in the period will jump by five million to 30 million, compared to 25 million last year, said industry chamber Assocham in a statement.

The chamber projected 44.7 per cent hike in the income-tax collection amount for Finance Ministry by 2010 which means the collections will rise to Rs 119,443 crore with number of tax payees exceeding over 45 million.

The reason attributed by the chamber for projected growth, both in terms of income-tax volumes and number of income tax payees for 2007-08, and thereafter is mainly on account of rising levels of income which will widen the tax base and voluntary compliance of income-tax payment, arising out of awakening factor as also fear psychosis because of strict monitoring that will follow from authorities concerned.

The projections for the year 2015 is that income tax revenue generation would be three times more from the level of 2006-07 to touch Rs 2,59,522 crore as the chamber expects a new income-tax code in place in next few years which will further simplify procedures, reduced bureaucratic hassles and make income tax collection methods much more simpler for income-tax payees, said the Assocham President Venugopal N Dhoot.

Mr Dhoot also said the share of income-tax in the tax revenue to the government had already shot up from 10 per cent to 17 per cent in the last 15 years, a period during which the procedures and hassles for income-tax collections was not that simple.

Mr Dhoot said in future when simplification would be the reality of the day, the number of income-tax payees would rise and touch a projected level of 45 million in next three years.

This will be because the openness in the administrative system will become more transparent and employment opportunities rise for people which would lead to multiplication in the income levels. As the government monitoring system also become more effective, tax evasion would become harder and compliance increase which will result in multiplication of government revenues, said the Assocham assessment.

The chamber has also pointed out that another reason for higher number of people falling under income-tax net would be because of the fact that the service tax base is widening and today it contributes roughly about over 54 per cent to national GDP.

As the base of service tax payers widens, many of them would be income tax payees also, and thus one can expect reasonable number of income-tax payees going up which will add to government kitty.

Mr Dhoot said the figure of corporate tax by the year 2010 would reach Rs 204,784 crore from the level of Rs 146,497 crore in 2006-07 and register a growth of nearly 40 per cent. The chamber has also predicted that revenue from this source could grow by over 3.5 times to Rs 5,21,630 crore by the end of year 2015, depending as to how the government executes its promise of putting GST in place by 2010.

In the last 15 years period following the initiation of tax reforms in 1991, there have been drastic changes in the rates of direct and indirect taxes thereby altering their respective shares in the total tax revenue.

The chamber assessment has concluded that the share of direct and indirect taxes in the gross tax revenue over the last 15 years post-liberalisation period depicts that while at the dawn of liberalisation, the shares of direct taxes and indirect taxes in the total tax revenue were 22.5 per cent and 73 per cent respectively. They have almost become equal (50 per cent each) in the last fiscal 2006-07.

UNI