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Mar 23, 2012, 11.51 AM IST | Source: CNBC-TV18

Taxman's pockets jinkling: FM may hike FY13 tax target

Direct tax collections in Mumbai registered a modest increase in FY12, but now, the Finance Minister wants more. CNBC-TV18's Ashmit Kumar reports that with the taxman ready to focus on international transactions thanks to the retrospective amendment, targets for the coming year could see a 30% hike.

Direct tax collections in Mumbai registered a modest increase in FY12, but now, the Finance Minister wants more. CNBC-TV18s Ashmit Kumar reports that with the taxman ready to focus on international transactions thanks to the retrospective amendment, targets for the coming year could see a 30% hike.

The Mumbai Income Tax Department offices will see a flurry of activity this year. Though FY12 tax collections fell short of targets, they were still 12% more than collections in FY11.

Even on a national scale, tax collections have come in around 11% higher. It is this increase in collections that has the finance ministry rubbing its hands in glee. Sources say tax collection targets for FY13 are likely to be higher than last year -- by 20% nationally, and by around 30% for the Mumbai circle alone.

Sources say that some of this optimism comes from the retrospective amendments in the Finance Bill, which brings big-ticket cross-border M&A transactions like the Vodafione deal under the it net.

Once the Finance Bill is passed, experts say the taxman will get busy with at least six more such cases, which have been lying dormant for a while.

These include the USD 19 billion Cadbury acquisition by Kraft Foods. The acquisition of a majority stake in Sesa Goa by Vedanta, Sanofi's USD 770 million acquisition of Shanta Biotech, GE's stake sale in Genpact for USD 500 million, the USD 150 million Idea-AT&T deal and Sabmiller's acquisition of the Indian assets of Fosters.

Experts say that the tax demand on these six deals already exceeds Rs 4,000 crore and add on any penalties, and the taxman is in for a bonanza this year.

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