Even as the index of industrial production (IIP) has reported recovery in some sectors,

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corporate and personal income tax collections in the April- June period do not reflect the trend.

Direct tax collections during the first quarter have fallen way short of the targeted 9.2 per cent growth target set by finance minister Pranab Mukherjee for this financial year.

Faced with high base effect and large refunds outgo, net direct tax collections went up by a modest 3.65 per cent to Rs 59,465 crore during the past three months compared with the same quarter in last financial year. During April- June 2008, the direct taxes mop-up stood at Rs 57,373 crore.

The refund in the first quarter went up by 52.01 per cent at Rs 17,600 crore, over Rs 11,578 crore in the relative period last year. “Higher tax refunds have resulted in meagre net tax collection,” an official release said. Personal income tax accruals showed 4.38 per cent growth over corresponding period last year. The net personal income tax collection in April-June 2009 stood at Rs 23,780 crore against Rs 22,782 crore a year ago.

Corporate tax collection, on the other side, increased by 3.31 per cent at Rs 35,709 crore compared with Rs 34,566 crore against the corresponding period last year. “Many experts were fearing that direct tax collections may reflect negative growth in first quarter, but this has not been the case. Higher tax collection, though only a little, seems satisfactory and suggests initial signs of recovery,” said Raj Kumar Bansal, chief financial officer, IDBI Bank.

Fringe benefit tax (FBT) and securities transaction tax (STT) collections recorded negative growth of 7.56 per cent and 9.9 per cent. FBT collections dipped to Rs 1,031 crore in first quarter of 2009-10 against Rs 1,115 crore in the same period last year. STT mop-up fell 9.9 per cent to Rs 1,462 crore in the first quarter, showing a decline in trade at the bourses.

The government's direct tax collections are projected to grow by 9.2 per cent to mobilise Rs 3,69,575 crore this year against Rs 3,38,212 crore collected last year.