I-T accounts for only 18% of tax revenues

India Inc will contribute 82 per cent of the total tax revenues of the Centre this fiscal and the share of income tax still accounted for a mere 18 per cent as majority of the population was out of the tax net.

According to data reeled out by Finance Minister P Chidambaram, India's Tax-GDP ratio is slated to go up from 9.82 per cent in 2004-05 to 10.61 per cent this fiscal despite the reduction in tax rates and restructuring of income tax slabs in the Budget.

"Bulk of the revenue comes from the corporate sector," Chidambaram said, adding there was no basis to infer that the tax burden of the poor have increased.

He pointed to India Inc's contribution by way of corporation tax, excise, customs and service tax accounted for 8.71 per cent of the GDP. The contribution of individual taxpayers, which also includes industrialists and top executives, is 1.9 per cent of GDP.

This is despite the fact that only 85,000 individual show income of more than Rs 10 lakh and the total number of tax assesses were about 3 per cent of the population. However, the trends in recent years show that the contribution from individual taxpayers was increasing.

India Inc contributed 85.3 per cent of Centre's tax kitty and individuals accounted for 16.7 per cent last fiscal. In 2003-04, the share of India Inc was 85.6 per cent while individuals contributed 16.4 per cent of centre's overall tax collection.

Apart from taxes, the government also expects to recover a "tidy sum" from India Inc by way of tax arrears.

The Centre collected more than three times in indirect tax arrears at Rs 2,642 crore (Rs 26.42 billion) last fiscal as against a meagre Rs 711 crore (Rs 7.11 billion) in 2003-04.

In case of direct taxes, it collected Rs 7,083 crore (Rs 70.83 billion) last fiscal as against Rs 5,540 crore (Rs 55.40 billion) in the previous year.

The tax reforms carried out by the finance ministry last year led to higher growth in direct taxes and improvement in the overall Tax-GDP ratio.

The direct tax to GDP ratio surged from 3.81 per cent in 2003-04 to 4.32 per cent in 2004-05 and is estimated to be 5.09 per cent this fiscal. Of the direct taxes, the share of corporation tax to GDP rose from 2.3 in 2003-04 to 2.67 per cent in 2004-05 and is slated to be 3.18 per cent this fiscal.

The share of income tax will go from 1.5 per cent in 2003-04 to 1.64 per cent in 2004-05 and further to 1.9 this fiscal.

Indirect tax to GDP ratio was slated to be 5.52 per cent this fiscal, which is marginally higher from 5.5 per cent in 2004-05 and 5.34 per cent in 2003-04.

The share of excise is slated to go up from 3.29 per cent in 2003-04 and 3.24 per cent in 2004-05 to 3.49 this fiscal.

A series of duty cuts is expected to reduce the share of customs to GDP ratio to 1.53 per cent this fiscal from 1.81 per cent in 2004-05 and 1.76 per cent in 2003-04.

The share of service tax is slated to go up from 0.29 per cent in 2003-04 and 0.46 per cent in 2004-05 to 0.5 per cent this fiscal.The government expects a 20 per cent jump in tax collections at Rs 3,02,329 crore (Rs 3023.29 billion) this fiscal.