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July 16, 2001
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Money > Business Headlines > Report July 16, 2001 |
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Ministry suspects corporates understated profits in Q4Santosh Tiwary & P Vaidyanathan Iyer The good profits posted by several corporates in the first quarter of the current fiscal have not gone unnoticed. The finance ministry is planning to investigate if companies booked their last quarter income of 2000-01 in the first quarter this year to pay tax on lower rates. The huge shortfall of over Rs 65 billion on direct tax collections from the revised estimate indicates the possibility of corporates shifting their income and profits from the last quarter of 2000-01 to the first quarter of this year. Top finance ministry officials said that the government suspected that the delayed booking of income was one of the major reasons for sluggish tax collections. Finance Minister Yashwant Sinha had abolished the 10 per cent surcharge on personal income tax and corporate tax besides slashing the dividend distribution tax to 10 per cent from 20 per cent earlier in the Budget for 2001-02. According to the final figures, direct tax collections in 2000-01 witnessed a huge shortfall of 67.38 billion from the revised estimate of Rs 739.92 billion. The Budget estimate for the previous fiscal was pegged at Rs 716.30 billion. Corporate tax realisation during 2000-01 fell short by Rs 30.65 billion from the revised estimate of Rs 387.21 billion (BE: 400.40 billion). Income-tax mop-up during the fiscal was Rs 36.73 billion less that the revised estimate of Rs 352.71 billion (BE: 315.90 billion). Sources said that the massive shortfall in direct tax collection from the RE had come as a surprise for the revenue department, particularly in the background of impressive collections till November 2000. They added that there had been an insignificant growth in the direct tax mop-up during the last four months of 2000-01. A senior revenue department official said that though the growth in direct tax collection in the previous fiscal has been more than 20 per cent over 1999-2000 mop-up, the huge shortfall needed to be examined. He added that economic slowdown and Gujarat earthquake were the main reasons for collections not matching the expectations. "But, there is certainly something more to it," said the official. The finance ministry enquiry into the matter is likely to focus on the possible misdeclaration of profits by the corporates in 2000-01 to avail benefit of the 2001-02 Budget. Powered by YOU MAY ALSO WANT TO READ:
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