The growth rate of corporate tax collections has slowed down to a mere 4 per cent during the first half of the current financial year as big companies such as
Maruti Suzuki India Ltd and
Indian Oil Corporation (IOC) are not doing well this year.
This falls far short of the 21.5 per cent growth target fixed in Finance Minister Pranab Mukherjee's Budget for 2011-12.
Finance ministry officials have been claiming that the sharp decline in the
corporate tax growth rate has been due to the large number of refunds this year and collections are likely to pick up in the second half.
Maruti Suzuki mulls price hike over rupee fall However, senior income tax officials in the field do not exhibit the same degree of confidence.
A senior official told Mail Today that the profit of Maruti Suzuki has halved during the second quarter to Rs 240 crore as sales slowed due to the increase in interest rates on loans, high fuel prices and the prolonged strike at the Manesar plant.
Similarly, IOC has posted a loss due to skyrocketing prices of crude oil, which it could not cover up due to the regulated prices of kerosene, LPG and diesel.
"If we lose Rs 500 crore in tax from these two companies, for instance, there is no way that we can cover up by increasing collections from smaller players," he explained.
SPECIAL: Indian Oil Corporation - Barrelling ahead "Even with stepped up searches and raids we can only enhance collections by around Rs 25 to 50 crore," he added.
Finance ministry officials have also been claiming that net corporate tax collections have slowed because of huge refunds in the first half and collections are likely to pick up during the second half. However, experienced officers in the field point out that there is no guarantee that the refunds will come down in the second half.
"Large refunds normally result from decisions from appellate tribunals and courts and if more such cases are settled in the second half in favour of corporates, the refunds will have to be made," an IRS officer pointed out.
The latest figures show the gross tax collections during the first six months amount to 39.6 per cent of budget estimates.
Courtesy: Mail Today 
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