Annual advance tax collection targets look out of reach

With the finance minister going on record to say that there could be fiscal slippages this year, the taxman is feeling the heat with revenue targets looking elusive. CNBC-TV18's Neha Arora reports that upcoming advance tax figures may affirm these fears.

The government's fiscal consolidation plans are circling the drain and slowing tax collections offer no support. Given the sharp fall in industrial activity, corporate profitability has taken a hit and tax revenues are dwindling. Tax officials said that the advance tax receipts for the October-December quarter are unlikely to bring good news, especially from the Mumbai circle.
Though Mumbai is currently ahead of last year's collections, it is 15% short of the November-end target.
Mumbai tax officials said that meeting the original Rs 1.85 lakh crore annual collection targets will be difficult, forget the revised target of Rs 2.04 lakh crore. Working against the taxman is the weak market sentiment. This has led to a sharp fall in Securities Transaction Tax collections.
The tax department is now looking at alternate revenue streams like a plan to raise transfer pricing adjustments worth Rs 50,000 crore against corporate India. It is also hoping that a favourable judgement from the Supreme Court next week in the Vodafone case could result in a Rs 12,000 crore gain.
Going by trends from the first half of the year, the IT department is also looking at the banking sector, specifically SBI, to throw it a life-line. It also hopes the auto sector may pay substantial advance tax, thanks to a strong performance by players like M&M, Bajaj and Hero MotoCorp.
When it comes to oil companies, it's not holding its breath, mainly because these firms are yet to receive subsidy dues from the government. Nor is the manufacturing space holding out much hope with experts predicting weak industrial output next week as well.
Clearly, the taxman is not very happy, as he may have to tell his bosses that targets are out of reach.