Finance minister P Chidambaram today said that the government expected to meet its revenue and fiscal deficit targets for the financial year due to the growth in corporate and income tax collections.

Speaking to the media in the capital, Chidambaram said that there was "a case for moderation" in direct taxes if voluntary compliance increased, though he would not elaborate if the rates would be lowered in the forthcoming budget.

Talking about indirect tax receipts, Chidambaram said that service tax and customs collections too are largely on target, though he said that there were some shortfalls in excise collections. He also said that this overall revenue improvement would ensure that the government meets its fiscal and revenue deficit targets for the financial year.

India is seeking to cut its fiscal deficit to 3.3 per cent of GDP by the end of 2007-08, which will be down 0.2 per cent from a year ago.

Direct taxes receipts crossed Rs2.05 lakh crore rupees in the nine months, up 42.4 per cent from a year back, and seemed to be poised to breach the Rs3 lakh crore levels sometime during this fiscal, according to sources in the ministry. The government's target for direct tax receipts for 2007-08 was Rs2.67 lakh crore.

Tax receipts have shot up, driven by a booming corporate sector and a strong economy. The stock market rose 47 per cent in 2007, and the economy is on track to meet the central bank's forecast of 8.5 per cent growth in 2007-08.

Chidambaram disclosed that the growth in corporate tax collection during April-December was better than expected by 40 per cent, while personal income tax had exceed targets by 50 per cent.

According to the finance ministry, corporate tax collections were of Rs1.28 lakh crore income tax receipts of Rs77,300 crore in the first nine months of 2007-08.