India Economy: Advance tax portends bigger downturn?

Sunday, December 14, 2008

Last Friday, IIP for October was released and it was negative; on Monday, the advance tax paid number will be released.  The prognosis is not good.  With profits likely to come under increasing pressure Government finances will suffer...the 100,000 crores thrown away on farmer relief would have come in handy.

According to sources, corporate tax collections are also likely to go down to around 15%.

Corporates are postponing payment of advance tax resulting in a 10 per cent shortfall in collections in December compared to the same month last year. The overall growth in tax collections so far this year have also been slow compared to the targeted 35 per cent growth in tax collection for the fiscal.

Mumbai tax officials pegged total advance tax collection in the circle, as of November, at Rs64,484 crore, up 16 per cent from the year-ago figure of Rs55,620 crore, but way below the 35 per cent target.
RBI projects further deterioration in government Finances
"While expenditure is slated to increase in the coming months, growth of tax revenue is likely to decelerate with the expected moderation in real economic activities following the global financial meltdown," RBI said in its monthly bulletin.
Prepare yourself for continued high market volatility this coming week.  I expect the end of week to be lower than last Friday's close of 2920...I know I am in the minority...but aside from selling exhaustion, there is nothing underpinning this over-valued market.

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