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FM confident of 8.5% growth Direct tax collection target set for a big hike, says Chidambaram. On a day the Sensex slipped by over 500 points on fear that high oil prices will fuel inflation and hurt economic growth, Finance Minister P Chidambaram expressed confidence that the economy would grow a robust 8.5 per cent in the current fiscal and the direct tax collection target would be revised sharply upwards. The Central Board of Direct Taxes (CBDT) will meet in the next couple of days to finalise the revision. The target will be revised upwards by a very substantial amount," Chidambaram told reporters after addressing the 24th annual conference of chief commissioners & directors general of income tax here today. When asked the reason for his optimism in the face of a palpable economic slowdown, especially in the manufacturing sector, Chidambaram said gross domestic product growth rate was expected to remain strong. "Every estimate says the economy will grow at 8.5 per cent in 2008-09," he said. In 2007-08, the economy grew 9 per cent, according to the revised estimate released by the Central Statistical Organisation (CSO) recently. A latest study by industry chamber Confederation of Indian Industry (CII) said the economy would grow around 8.6 per cent during the current fiscal on account of a sustained growth in net profits of companies and a gradual increase in productivity and capital efficiency of the Indian corporate sector. The net profit margin, measured as net profits as a percentage of sales, have increased from 8.8 per cent to 9 per cent over the last eight quarters. This is corroborated by the fact that corporation tax collections have increased consistently upwards, and for the year 2007-08, the net corporation tax collections have grown by 32.1 per cent," said the CII report. The government has targeted direct tax collection of Rs 3,65,000 crore for the current fiscal. A CBDT official told Business Standard that the new target could be set above Rs 4,00,000 crore. The government had collected Rs 3,14,468 crore as direct taxes in 2007-08. This was 117.56 per cent of the original Budget estimate for 2007-08, said Chidambaram. During the current financial year, Chidambaram expects more and more assessees to file returns electronically. "This year, the number will go up dramatically as more corporate and non-corporate assessees are expected to resort to e-returns. We will get early indications of e-filing on the first date of the advance tax payment on June 15," he added. Chidambaram said that those who have never filed returns or have stopped filing returns three years back will be prosecuted if identified during search and seizure. He added that 15 such cases had been identified recently. The finance minister also expects that the number of tax returns filed may cross 30 million in the current fiscal. Last year, 27.3 million tax returns were filed.