Direct tax collections at Rs.3,14,468 crore surpassed indirect taxes for the first time by about Rs.34,000 crore in the fiscal 2007-08. Higher direct tax collections have helped the government reduce fiscal deficit, meet the FRBM targets, and increase public investment in the social sectors. In view of the responsibility of being the primary contributor to the exchequer of the Government of India, the Income Tax department will discuss various issues relating to further improving direct tax administration during the Annual conference of Chief Commissioners and Directors General of Income Tax to be held on 9th and 10th June 2008.

During fiscal 2007-08, net direct tax collections stood at Rs.3,14,468 crore as against net collection of Rs.2,30,184 crore during fiscal 2006-07, registering a growth of 36.6 percent. Thus, for the second consecutive year, direct tax collections have grown at over 35 percent. This is despite the fact that refund payouts during 2007-08 were more than the previous fiscal. The growth in Corporate Taxes was 32.1 percent (Rs.1,90,653 crore as against Rs.1,44,318 crore) while Personal Income Tax grew by 42.1 percent (Rs.1,14,277 crore as against Rs.80,397 crore).

High growth in direct tax collection in the past two years has been achieved due to better tax compliance among the taxpayers and improved tax administration and enforcement by the Income Tax department. The cost of direct collection, on the other hand, declined to an all-time low of 0.54 percent, among the lowest in the world.

Direct tax collections surpass indirect taxes, reinforcing fiscal consolidation and prompting administrative and compliance reforms. Direct tax receipts in fiscal 2007-08 surpassed indirect taxes and materially aided fiscal consolidation by reducing the fiscal deficit and supporting social sector investment. Growth in net direct tax collections continued for a second consecutive year, led by corporate and personal income tax increases despite higher refunds. The Income Tax Department attributes the rise to improved taxpayer compliance and strengthened administration and enforcement, while the cost of direct collection declined to a historically low level. The Department will discuss measures to further improve direct tax administration at an upcoming conference of senior officials.