Archive for the 'Taxes' Category

Bhubaneswar sends much more direct tax than much more populous cities such as Jaipur, Patna, Nagpur, Lucknow and Kanpur and has had the highest growth in direct taxes from 2010 to 2011

Bhubaneswar- Cuttack- Puri, CENTER & ODISHA, Khordha, Taxes 1 Comment »

(Thanks to Devasis Sarangi for the pointer to this in facebook.)

Following is from a report in Business Standard.

Number one in growth over last year’s net direct tax collection during April 1-December 1 is Bhubaneswar, with a 52.6 per cent increase at Rs 4,187 crore (Rs 2,744 crore in last year’s corresponding period). Of the collection this year, Rs 2,959 crore has come from corporate tax and Rs 1,226 crore from personal income tax.

A senior department official said the better growth in direct tax realisation in smaller regions clearly indicated an increase in business activities in these. And, that this had come despite overall sluggish performance.

I am tempted to draw more conclusions but am not sure of jurisdictions of each of the locations in the left. For example, for the number corresponding to Bhubaneswar, is the data just about collection from Bhubaneswar city (as defined by what?) or about the collection from Bhubaneswar tax circle (what are the areas it covers?). Although not knowing this makes it difficult to draw more conclusions, one thing is for sure; Bhubaneswar tops in the growth of direct tax collections.

Odisha revenue sources and revenue collection in 2009-10 and 2010-11

Odisha govt. action, RESOURCE MOBILIZATION & BUDGETS, Taxes Comments Off on Odisha revenue sources and revenue collection in 2009-10 and 2010-11

The following is extracted from

  • Total revenue collection:  In 2010-11 amounted to Rs 15,931 crore against Rs 12,194 crore in 2009-10, a growth of 31 per cent.
  • Tax revenue collection was fixed at Rs 11,000 crore in 2010-11, the achievement was Rs 11,206.44 crore recording a growth of 25 per cent.
  • Non-tax revenue collection, the growth rate was 47.83 per cent with an amount of Rs 4,748.46 crore against a target of Rs 3,500 crore.
  • The target of revenue collection for 2011-12 was fixed at Rs 19,000 crore with Rs 13,800 crore as tax and Rs 5,200 crore as non-tax revenue.
  • The Governmental dues under professional tax, land revenue, stamps and registration, excise, sales tax, vehicle tax, entry tax and electricity duties have been included under the tax revenue category while the dues under mining royalty, forest and wildlife, major, medium and minor irrigation, water supply& sanitation, interest, dividend and other departmental receipts have been included under the non-tax revenue category.

Increase in tax revenue for Orissa

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Following is from a report in

… Sri Ghadai told the Media persons that During the Current financial year up to the month of December 3646.75 Crore has been collected. During the last year it was 3069.81 Crore. … The target of collection has been fixed to Rs. 5099.98 Crore up to the month of March. The Sales Tax officers should effort heartly to achieve the target.If it will be worked out it will be increased from 5500 to 5600 crore. The Sales Tax officers were instructed to discuss with the traders those are not filling returns. He said that the Collection of Value Added Tax (VAT) has been increased.Up to the month of December it has been collected 2745.51 Crore and it was 2226.39 during the last year . So it has been increased 23.32 percent.But this increase will reach at 25 percent. Similarly CST has been collected up to the month of December is 397.80 crore where as during the last year it was collected 368.35 crore .It shows increase of 7.99 percent.The entrance tsx has been collected 443.29 crore where as during the last year it was collected 421.50 crore.It shows increase of 5.17 percent.The profession Tax has been collected 58.57 crore as against 51.81 crore which is increase of 13.5 percent. 

Orissa getting no tax from Bhushan Steel operations In Kantabania, Dhenkanal: Samaja

Bhushan Steel Ltd., Dhenkanal, Samaja (in Odia), Steel, Taxes Comments Off on Orissa getting no tax from Bhushan Steel operations In Kantabania, Dhenkanal: Samaja

There are at least two Bhushan companies. This article is about Bhushan steel Ltd.The other company is Bhushan Power and Steel.

Commercial tax collection of Orissa

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Following is an excerpt from a report in Pragativadi.

The state government has set an ambitious target on collecting commercial taxes to the tune of Rs 6,100 crore during the current fiscal.

… the target collection would be about 16.81 per cent more than the last year’s collections.

… The state government was able to collect Rs 5,222 crore during 2007-08, including Rs 380 crore received from the Centre towards the compensation for reduction of Central Sales Tax (CST).

The collections from value added tax (VAT), central sales tax (CST), entry tax, entertainment tax and professional tax was Rs 4,842 crore during last fiscal. The target fixed for collection for 2007-08 was Rs 4,641 crore.

Public Service ad on VAT: Samaja

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Bhubaneswar Income tax collection

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Bhubaneswar has recorded an appreciable increase in income tax collections. Economic times reports that personal income tax increased by 30% this year. Excerpts:

” A similar trend was seen in Bhubaneshwar. While the corporate tax collections from this zone declined by 11.43% to Rs 584 crore, personal income tax collections grew by 29.62%.”

It must be added that corporate tax collection decreased by 11.5%. Something to analyze.

Mine reserves; mining leases; revenue from mines: from Pratisruti Plus May 1-15 issue

Coal, Duties, Export duties, Iron Ore, MINES and MINERALS, Mining royalty, Taxes Comments Off on Mine reserves; mining leases; revenue from mines: from Pratisruti Plus May 1-15 issue

Following are some tables from Pratisruti Plus May 1-15th issue.


Economic Effects of POSCO-India : A study by NCAER

Bhubaneswar-Paradip, Budget, State, INDUSTRY and INFRASTRUCTURE, INVESTMENTS and INVESTMENT PLANS, Iron Ore, Jagatsinghpur, MINES and MINERALS, Mining royalty, Paradip - Jatadhari - Kujanga, POSCO, PPP, SEZs, Steel, Taxes 1 Comment »

I came across a 1-page note someone from POSCO-India gave me when I was visiting Bhubaneswar in December 2006-Jan 2007. The 1-page note summarizes a study done by NCAER. The study has also been reported in News media such as Hindu Businessline. (POSCO-India in its web page has additional links.) We will give some excerpts from the Hindu Businessline report.

The 1-page note: POSCO-India’s rs 52,810 Cr investment by 2016 will stimulate Orissa Economy.

  • Economic Benefit:
    • Generate Rs 29,760 crores additional annual gross output for Orissa including Rs 12,610 Crore of POSCO-India’s direct gross output.
    • Create excess annual value addition of Rs. 12,100 crores for Orissa which equals 19% of Orissa’s state GDP in 2005-06 (equals 11.5% in 2016-17)
  • Employment:
    • Job creation of 870,000 man years, absorbs 88% of state unemployment backlog (i.e., decrease in backlog of employment from 9.9 lakhs in 2005-06 to 1.2 lakhs).
    • 18,000 man years of direct employment in POSCO-India.
  • Tax Contribution:
    • POSCO-India annual tax contribution (Rs 2,620 Crores) would be appx. 17.6% of total tax revenue of Govt. of Orissa in 2016-17.
    • POSCO-India SEZ would contribute Rs 174,970 crore tax revenue in next 35 years.
      • Rs 77,870 crores would be to Govt. of Orissa and Rs 97,100 crores to Govt. of India.
      • The differences of tax between SEZ and DTA status is less than 8% for Govt. of Orissa and 5% for Govt. of India.
  • Comparison with current Orissa Economy:
    • Orissa in 2003-04:
      • Gross Output: 111,378 crores
      • State GDP: 53,830 crores
      • Employment: 143 lakhs (2001 census)
      • Tax: 8170 crores (2005-06)
    • POSCO-India’s impact:
      • Gross Output: 29,760 crores
      • State GDP: 12,100 crores
      • Employment: 8.7 lakhs
      • Tax: 2620 crores

We now give some excerpts from the Hindu Business line article of January 2007 which partly explains how some of the above numbers were calculated. That article was written by R. Venkatesan who works for NCAER, but the article was his personal view.

The NCAER study broadly used the ADB/World Bank methodology on the social cost-benefit with minor adjustments for the local parameters. Econometric models were used to project border prices for the useful life of the project. The project’s impact from the State economy perspective in terms of the impact on the State GDP (output multiplier effects) and employment opportunities created within the State (employment multiplier effects) was also assessed.

The output multiplier for iron ore was found to be 1.4 compared to 2.36 for steel. In other words, every Rs 1 lakh worth of output in the iron ore sector would result in Rs 1.4 lakh of output (including the Rs 1 lakh output of iron ore) compared to Rs 2.36 lakh for every Rs 1 lakh output of steel. The employment multipliers for iron ore and steel work out to 0.35 and 0.69 man-years respectively. Therefore, in terms of both output and employment, steel has a larger impact.

These multipliers imply that the Posco project would create an additional employment of 50,000 person years annually for the next 30 years vis--vis 870,000 person years in the steel project alternative. In terms of value addition, the iron ore and steel project alternatives would contribute 1.3 per cent and 11.5 per cent to Orissa’s State Gross Domestic Product (or SGDP) by 2016-17 respectively.

An important part of the study was the Least Cost Analysis of technology options in the steel-making, the Finex process that Posco purports to bring and the traditional blast-furnace technology. The Average Incremental Economic Cost was used as the yardstick; this was followed by computing the economic IRR (internal rate of return)
to examine whether the project was economically worthwhile from the national economy point of view.

The EIRR for the Orissa project works out to 16.6 per cent for base case and even in the worst case scenario, the EIRR at 13.9 per cent would remain above the hurdle rate of 12 per cent. The economic impact of the project was estimated at $2.5 billion at the test discount rate of 12 per cent.

The significant feature of the study was the estimation of depletion premium or the opportunity cost for depleteable and non-renewable resource iron ore for reasons cited below:

India’s high-grade ore (+ 65 per cent Fe content Haematite) reserves, proven and probable, amount to only 0.58 billion tonnes. And even if we were to factor in indicative and inferred reserves (probable/feasible), the total reserves (proven and possibly future potential) would be only 0.92 billion tonnes.

India’s medium-grade ore (+62 per cent Fe to 65 per cent Fe Haematite) reserves, proven and probable, is only 1.3 billion tonnes. Here too, if we factor in indicative and inferred (probable/feasible and pre-feasibility estimated) reserves, the total reserves (proven and possibly future potential) will be only 2.8 billion tonnes.

Policy Implications

Orissa stands to gain significantly if instead of exporting iron ore it processes it to steel within the State, in terms of both employment generation (17 times), and GDP impact (9 times).

India’s high and medium grade iron ore reserves may not last more than 19 years even if exports of these grades are frozen at the current level or if the targets set out in the draft steel policy are to be met. The economic analysis considered the depletion premium for high and medium grade iron ore. This is the opportunity cost to the national economy of using the depletable resource, which is the average incremental cost of depletion premiums computed year-wise.

Any exporter of iron ore of medium and high grades from the State needs to pay a depletion premium of $27 per tonne. Even this would be a sub-optimal policy from the State’s viewpoint if it can process the medium and high grade ore to steel. No such depletion premium has been applied for coking coal as its price did not exhibit any
trend before the recent steep price hike.

For the eastern States seeking to raise the mineral sector’s share in their GDP, it may be a good idea to set up processing facilities. It would not be advisable to allocate iron ore mines through open bids or accept increased royalty payments, even accounting for the depletion premium, compared to the option of processing iron ore to steel. Future cost-competitiveness and logistical advantage imply that iron ore-rich States can compete with existing over-capacities in the US, Europe and Japan even after factoring in the capital charges for new investments.

Export of iron ore needs to be restricted to grades other than medium and high-grade ore categories; for instance, export of beneficiated ore from Goa using inland waterways logistics advantages could be encouraged. Allowing exports of high grade ore would facilitate export of steel from existing over-capacities in the US, Europe and Japan to East Asia at the expense of future steel exports from new Indian steel capacities which are likely to enjoy cost-competitiveness over existing over-capacities elsewhere.

I am not qualified to judge the above analysis. I would appreciate any comments, analysis, criticisms etc. on the above.

Orissa targets Rs 6,000cr revenue

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Asian Age reported that the Orissa government has set an ambitious target to collect Rs 6,000 crore revenue during the year 2007-08. If successful, it would mean an increase of Rs 1,542 crores over the previous year.

The revenue earning which stood at Rs 1,168 crores in 1999-2000, has improved a lot in the past seven years. In the year 2006-07, the state government earned Rs 4,458 crores.