Indian Budget 2010-11

Indian Budget for the year 2010-11 was released on 26th February by Finance ministry. Besides the annual financial statement of Indian Government, there is a lot of statistical data available in the documents annexed to the budget.




Some of them I am providing below:

The Income-tax Department has received 3,66,233 corporate returns electronically up to 31st December, 2009 for the financial year 2008-09 [i.e., assessment year 2009-10]. These returns constitute about 90% of the total corporate returns expected in financial year 2009-10. For the purposes of estimating the tax expenditure, data pertaining to these 3,66,233 companies was culled out from the database for analysis.
The following facts emerge from an analysis of the data:-

• The companies reported Rs. 6,68,581 crore as profits before taxes (without including losses where losses were reported by about 43% of the companies) but declared a total income (taxable income) of Rs. 4,49,085 crore only for the financial year 2008-09.
• These companies paid Rs. 1,52,280 crore as corporate tax [inclusive of surcharge and education cess] during the same financial year i.e. 2008-09.
• These companies also paid Rs. 6,523 crore as Fringe Benefit Tax and Rs. 10,981 crore as Dividend Distribution Tax during the financial year 2008-09.

The effective tax rate (which includes surcharge and education cess but excludes dividend distribution tax and fringe benefit tax) of the entire sample was 22.78 per cent.Effective tax rate including Dividend Distribution Tax was 24.42 percent.
While the effective tax rate of almost all the industries is below the statutory level, it is very low for the IT-Enabled Services Providers & BPO Service Providers and Software Development Agencies at 13.1 per cent and 11.8 per cent respectively. The two industries contributed 6.82 per cent of the total profits but only 3.70 per cent of the total taxes.

Accelerated depreciation accounts for the head under which the highest amount of tax revenue (Rs. 21,175 crore) has been foregone. Among various sectors, deductions for Software Technology Parks (STPs), Export-Oriented Undertakings (EOUs), Power, and Telecom sectors account for 18%, 10%, 9% and 6% of the total tax foregone respectively.

The total number of returns filed by individuals for financial year 2008-09 is estimated to be 2,79,49,329. According to the sample returns, 6 per cent were filed by senior citizens and 26.3 per cent of the balance returns were filed by women (other than senior citizens). Thus, the number of senior citizens availing the higher exemption limit of Rs. 2,25,000 is 16,66,040. Similarly, the number of women [who are not senior citizens] availing the higher exemption limit of Rs. 1,80,000 is 73,45,824.

	Revenue Foregone in 2008-09	Revenue Foregone as a per cent of Aggregate Tax Collection in 2008-09	Revenue Foregone in 2009-10	Revenue Foregone as a per cent of Aggregate Tax Collection in 2009-10
Excise Duty	128293	21.25%	170765	27.04%
Customs Duty	225752	37.39%	249021	39.43%
Total	414099	68.59%	502299	79.54%

To conclude, the amount of revenue foregone continues to increase year after year. As a percentage of aggregate tax collection, revenue foregone remains high and shows an increasing trend as far as Corporate Income-tax is considered for the
financial year 2008-09. In case of indirect taxes the trend shows a significant increase for the financial year 2009-10 due to reduction in customs and excise duties. Therefore, to reverse this trend an expansion in the tax base is called for.

Conclusion? Expect higher excise and customs duty. Fascinating data though.