Can we attribute the increase in direct tax collections to GDP growth?
An important reason for more collections in direct tax collections is high GDP (gross domestic product) growth. India’s economy currently is the third fastest growing in the world after China and Vietnam. The higher industrial production has given strong hopes for sustained GDP growth in future, resulting in more incomes and consequently more tax. What is notable in this growth is horizontal expansion, which would result in cost economies, and also reduction in regional disparities. The combination of high growth with infrastructure development reflects as higher incomes and more tax, which trend is likely to continue. What accounts for the rise in corporate profits? One finds that results for the half-year `06 have been more than what these were for the full year 2005-06, leading to accelerated growth in the earnings of the companies. Strong second quarter results have enabled around many companies to declare interim dividend, ranging from 5 per cent to 300 per cent. The thrust on inf
