Direct tax collection continues to grow at a fast pace. Keeping aside the general apprehension that slowdown in the economy will hit profitability of companies, the corporate tax collection has grown 50% in April-July, over the same period last year. This clearly shows that profitability of companies has gone up substantially in first four months of 2008-09.

The total direct tax collection has swelled by around 47% to Rs 71,648 crore, up from Rs.48,756 crore in the same period last year. Corporate tax collection stood at Rs 41,598 crore as against Rs 27,718 crore in April-July.

Personal income tax, including fringe benefit tax (FBT), securities transaction tax (STT) and cash transaction tax (CTT) grew at 42.82% to Rs 29,982 crore as against Rs 20,993 crore in the corresponding period last year. Growth of FBT was 44.34% to Rs.1,260 crore against Rs 873 crore last year. Despite crash in the stock market, STT grew at 15.46% to Rs.2 164 crore against Rs 1,874 crore in April-July last year. Banking Cash Transaction Tax (BCTT) grew at 33.75% to Rs.223 crore as against Rs.167 crore in April-July last year.

Tax growth in Mumbai and Delhi zones was 36.33% and 76.40%, respectively. Other regions with high tax growth are Nagpur at 77.80%; Kochi 58.08%; Kolkata 49.87%; Hyderabad 40.69 and Bangaluru 40.25%. Growth in direct tax collection has been driven by a growth of 44.56% in tax deducted at source (TDS), which stood at Rs 45,935 crore as against Rs.31,776 crore in the first four months of the last year. Growth in corporate TDS was particularly high at 60.6%.

The central board of direct taxes in a statement on Wednesday said that robust growth in direct tax collections is a result of tax education and compliance mechanism put in place by the Income-Tax department in the area of TDS and shows improvement in tax administration and tax compliance levels.

The cost of direct tax collection, on the other hand, had declined to an all-time low of 0.54% during 2007-08, amongst the lowest in the world.