News: India confident of $96 bln in tax receipts in 06/07

(RTR 02/06/2006) New Delhi - India's government is confident of achieving 20-percent growth in gross tax receipts in the 2006/07 fiscal year to reach its target of more than 4.4 trillion rupees, revenue secretary K.M. Chandrasekhar said on Friday.

"This fiscal, our target is more than 20 percent growth in tax collections... Income and corporate tax collections in April were strong and May collections were also good," he told reporters after launching a new income tax return form.

Gross tax receipts more than doubled to 149 billion rupees in April from 65.3 billion in the same month last year.

Gross tax receipts were estimated at 3.7 trillion rupees for the last fiscal year.

After providing for refunds and transfers to states, net tax receipts are budgeted at 3.27 trillion rupees in 2006/07.

India is trying to simply tax laws and streamline procedures to bring more people into the tax net and cut its fiscal deficit.

At present, only 30 million people pay income tax, just 3 percent of the population of more than one billion.

Chandrasekhar said the government planned to simplify tax laws and then come up with an exempt-exempt-tax (EET) model so that all savings instruments had the same tax treatment.

The EET model, prevalent in developed nations, stipulates that savings instruments are taxed only during the withdrawal stage and exempted during collection and accumulation.

At present some savings instruments like provident funds are completely exempt while tax is deducted at source for bonds and bank deposits.

The new tax return form provides for a cash-flow statement and taxpayers have to state their income and expenditure for the financial year along with investments and savings.