In what the Indian Income Tax Department (ITD) labeled as “impressive growth,” the CBDT reported net tax collections of INR1,838 billion for the April up to November period, from INR1,776 billion in the equivalent period in the previous fiscal year. PIT collection, which includes Fringe Benefit Tax, Security Transaction Tax and Banking Cash Transaction Tax, totaled INR703 billion, compared to the previous year’s INR672 billion, making a rise of 4.53%. Corporate Taxes collected for the period increased by 3.17%, from INR1,097 billion to INR1,132 billion. Individually, the Securities Transaction Tax grew by 4.44% to INR43.5 billion.

Tax collection figures for November, when compared to the previous November, rose by a cumulative 0.28%. Corporate Tax collections in November 2009 fell by 29.5% to INR32.1 billion, from November 2008′s INR 45.6 billion. PIT receipts rose by 23.8% to INR71.6 billion from the previous INR 57.9 billion figure.

However, with only four months left in the current fiscal year, direct tax collection in India is well short of its INR 3,700 billion target.

Photo by Robert S. Donovan

This year, of the countries surveyed, New Zealand was found to be the least corrupt, with Denmark, Singapore, Sweden and Switzerland following. Somalia was the country perceived to have the highest level of corruption, trailed by Afghanistan, Myanmar, Sudan and Iraq. The UK and the US ranked 17th and 19th, respectively. China was ranked 79th, Russia came in at 146th and India received a ranking of 84th.

The CPI is constructed by compilation of thirteen sets of data, attained from ten independent sources, such as the World Bank and World Economic Forum. Seven of the thirteen datasets are provided by an expert evaluation or risk assessment group, the remaining six are results from business sector corruption perception surveys.

According to Huguette Labelle, Chairperson of Transparency International, speaking in a video release accompanying the report results, this study shows that no country is completely free of corruption, though on average some areas score better than others. The survey shows that a “vast majority” of countries score less than five, which according to Huguette Labelle, points to a grave situation in a time of tentative economic recovery and mass use of government stimulus packages.

An overview of the CPI study can be seen on the Transparency International website.

The initial details concerning the structure of India’s upcoming GST implementation have been released by the Empowered Group of State Finance Minister. Though the paper is not a complete account of every aspect of the new GST system, it is the first comprehensive discussion to both its format and implementation.

The group has stated that the new GST system will have two components: Central GST and State GST, both of which will be levied concurrently. Further, there will be two rates set for the GST: a lower rate for items that are deemed necessary, and a standard rate for those that are considered to be general goods. The discussion paper did not propose rates for any component of the GST. Slews of India’s current state and central taxes will be subsumed under the GST proposal, these include Value Added Tax (VAT), service tax, entertainment tax, luxury tax, excise and customs duties, amongst others.

The GST is scheduled to be implemented on April 1st 2010, though the lack of final details in the plan and uncertainty from Indian states is shedding some doubt on this proposal. Asim Dasgupta, West Bengal finance minister and Chairman of the Empowered Group of State Finance Minister, has said that it will probably not be until December that he is able to comment on whether the current GST implementation will be adhered to. Further, Asim Dasgupta has said that there are still inter-state disagreements and IT issues to resolve before further progress can be made.

According to India’s Central Board of Direct Taxes (CBDT), from the 1st of October, new tax rules will take effect mandating that any and all gifts received, valued at over Rs. 50,000, will be required to be declared and taxed by the receiver. Since the 1st of April 2006, cash gifts of Rs. 50,000 were subject to a tax liability, but the regulation has now been expanded to include land and buildings, shares and securities, jewellery, drawings, paintings, archaeological collections and other works of art . The value of the gift must be disclosed in the 2010-11 tax assessment year and the following years. Tax liability will be calculated on the basis of the receiver’s tax bracket once the gift value is taken into account.

The newly expanded gift tax does not apply to gifts between close relatives, which have been defined as siblings, spouses, siblings of spouses, parents and siblings of parents. Gifts received upon marriage are also not applicable for the tax, as are assets passed across in the event of inheritance, wills, or the passing of the donor. Gifts from trusts and local authorities are also exempt.

In an effort to raise net tax collection, the Indian government is proposing further changes to their taxation system. Spearheading the new bout of changes is the idea of lowering corporate tax rates to 25% from their current 30%. This would be the lowest corporate tax rate ever seen in India. Proposals of abolishing taxation on equity trades had also been floated. The changes are being introduced for the sole purpose of spurning on the Indian economy.

The funding for these tax cuts will come from increased efforts to improve taxation compliance, especially in personal taxation. Specific attention will be paid to expanding the tax payer base of India. Currently there are 27 million tax payers in India in a population of 1.2 billion. Stronger emphasis will also be placed on the punishment of tax shirkers, with fines and up to seven year prison terms.

At the announcement of this proposal Pranab Mukherjee, India’s Finance Minister, stated “The thrust of the code is to improve the efficiency and equity of our tax system by eliminating distortions in the tax structure, introducing moderate levels of taxation and expanding the tax base.”