The private, public and banking companies contributed Rs 81.9 billion, Rs 62.9 billion and Rs 26.3 billion gross income tax, respectively, during 2005-06. According to CBR Year Book 2005-06, the share of the private companies was the highest, followed by the public companies.
The sectoral contribution confirms that despite its below-potential compliance, the corporate sector remained the leading contributor to gross income tax collection in 2005-06.
The tax contribution is made in different forms ie self-assessed advance tax payment based on expected income, and/or payments with returns, and/or withholding taxes. For instance, the advance tax payment by the corporate sector was 25.6 percent in 2005-06, down from previous year's 28.8 percent. The contribution from other modes of payment increased slightly from 42.6 percent to 44.7 percent.
Despite its enormous profitability and expansion, the contribution of banking companies declined during the fiscal year against previous year. About voluntary income tax payment, the report said that since the share of payments with returns in Voluntary Payment increased from 19 percent in 2004-05 to 27 percent in 2005-06, the share of advance payments declined from 81 percent to 73 percent, which was an expected outcome.
SALES TAX: Only 17 industries (Commodity Groups) contributed about 79 percent of total gross receipts of indirect taxes. In fact, more than half of this collection emanated from top six items that included petroleum products, automobile sector (vehicles and parts), electrical and mechanical machinery, cigarettes, telecom sector, and iron and steel.
Prima facie, it was a case of narrowness of the base of indirect taxes. It also highlights that the pitfall of relying on any of these few items could have far reaching revenue implications. It should be obvious that any contingency faced by these industries could cast a debilitating effect on tax receipts, the report added.
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