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tax on other incomes (personal income tax). The forecast is based on the actualdata for 2003-04 to 2010-11 and on 2011-12 (BE). The growth in corporatetaxes was taken as a function of the growth rate in GDP, the inflation rate, thestatutory tax rate and the statutory tax base. In the case of corporation tax, thetax rates, inclusive of surcharge and cess, have been lowered from around 36per cent to around 32.5 per cent in the period between 2003-04 and 2010-11.This has also been accompanied by measures to widen the statutory tax base byincreasing the rate of Minimum Alternate Tax (MAT) on corporate incomes.The corporate tax to GDP ratio has risen year-on-year in five and fallen in twoyears in this period. Going forward, corporate tax rates as proposed in theDirect Taxes Code Bill, 2010 are slated to go down further to 30 per cent (fromthe current 32.4 per cent). Though tax concessions like profit linked deductionsare being phased out, the effect of the concessions which will be availed for theunexpired period will impact the collection over the next plan period. Similarly,for personal income-tax, the exemption limits have been enhanced during thisperiod, the income slabs have been expanded and the highest rate, inclusive ofsurcharge and cess, has been lowered from around 34 per cent to about 31 percent and to 30 per cent, going forward. Thus, the tax rates are slated to belowered and the tax slabs (for personal income tax) are to be expanded asenvisaged in the Direct Taxes Code Bill, 2010. These changes in the tax baseand rates make it arduous to base projections on a trend growth rate in view ofthe complex adjustment required to smoothen data.The method used to project direct tax collections over the five year period is touse a year on year moving average of the change in the ratio of tax collectionsto the GDP. For projecting the corporate tax to GDP and personal income taxto GDP ratios for 2012-13, the average of the year on year change in theseratios between the year 2003-04 and 2011-12 (BE) has been computed. For thesubsequent year’s projections, the same method has been followed by adoptingthe moving average method after dropping the first year projection andincluding the projection made for the immediately previous year. A refinementWorking Group Report on Centre’s Financial ResourcesPage-14
in the projections is to first project the gross collections and then separatelyreduce the refunds from these projections by increasing the base refund amountby the yearly growth rate projected for corporate income tax and personalincome tax respectively.In the case of the minor taxes, i.e., wealth tax and securities transaction tax(STT), the method has been modified. For wealth tax, based on previous trends,a buoyancy factor of 1 has been taken. STT has been in force only from 2005-06 onwards and is based on the number of transactions in the stock exchange aswell as their value and has recorded increases below the nominal growth rate ofGDP. It has been projected by taking a uniform growth of one-fifth of thenominal GDP growth.Indirect taxesFor projecting indirect tax revenues, the growth in nominal GDP has again beentaken as the key variable for the projections.Customs: In the case of customs, the other variables are the imports to GDPratio for Petroleum, Oil and Lubricants (POL) and for Non-POL goods. Theseimports to GDP ratios are then projected by the moving average method. Thisimplies that for projecting the imports to GDP ratios for both POL and Non-POL imports for 2012-13, the average of the year on year change in these ratioshas been projected for 2012-13. For the subsequent year’s projections, themoving average method has been adopted by dropping the first year’sprojection and including the projection made for the immediately previous year.The bifurcation between POL and Non-POL components of imports has beentaken in the ratio of 30:70 based on historical trends. To estimate the collectionsfrom customs duties on these projected imports figures, separate collection rateshave been applied to the POL (2.1 per cent) and Non-POL (10.6 per cent)imports based on import duty structure and historical trends. The underlyingWorking Group Report on Centre’s Financial ResourcesPage-15
Page 1 and 2: Reportof theWorking Group onCentre
Page 3 and 4: Loans to States and UTs…………
Page 5 and 6: Chapter-1IntroductionThe Working Gr
Page 7 and 8: forecasts and, for that matter, all
Page 9 and 10: the distinction of having the highe
Page 11 and 12: disintermediation of the Central lo
Page 13 and 14: 10 per cent in the first year and r
Page 15 and 16: Report of HLEC Chaired by Dr. C. Ra
Page 17: Chapter-2Tax RevenueEstimating tax
Page 21 and 22: Service Tax: For estimation of serv
Page 23 and 24: uoyancy of 2003-04 to 2007-08 to be
Page 25 and 26: Chapter-3Non-Tax Revenue and Non-De
Page 27 and 28: Interest ReceiptsInterest Receipts
Page 29 and 30: (GoI) is assumed to increase by 5 p
Page 31 and 32: towards Pension and other Retiremen
Page 33 and 34: S.N.Table 3.6:Total Non-Tax Revenue
Page 35 and 36: Chapter-4Non-Plan ExpenditureThe pr
Page 37 and 38: payments as a proportion of non-pla
Page 39 and 40: As per the MTFPS (2011-12), Defence
Page 41 and 42: provision for fertilizer subsidy ha
Page 43 and 44: The Thirteenth Finance Commission h
Page 45 and 46: 5 per cent growth thereon from 2011
Page 47 and 48: Other Subsidies: For each of their
Page 49 and 50: Plan by 113.91 per cent from `13,92
Page 51 and 52: This figure for 2010-11 and 2011-12
Page 53 and 54: Table 4.5:Revised Base Line Project
Page 55 and 56: Chapter-5Internal and Extra Budgeta
Page 57 and 58: Table 5.3:Projected IEBR for the 12
Page 59 and 60: (e) In several economic and even in
Page 61 and 62: private sector. This would imply th
Page 63 and 64: Annexure-IComposition and Terms of
Page 65 and 66: Annexure-IIComposition of Sub Group
Page 67 and 68: Nomination of Official/Academician
Page 69 and 70:
Annexure - IV(A)Log Values of CIT,
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