With barely two months remaining for the current fiscal to end, the direct tax collection is more than Rs 1,00,000 crore short of budget estimate but the government is hopeful of meeting the target despite economic slowdown affecting personal and corporate income.

India’s April-January direct tax receipts were up by a slower-than-expected 12.5 percent on-year, a senior official said on Wednesday, as the global turmoil and sluggish domestic demand trimmed corporate profits.

The data has fuelled speculation of higher market borrowing by a cash-strapped government that has pledged to spend an extra 1.47 trillion rupees in FY09 and foregone revenues by cutting factory gate duties by 4 percentage points in December.

Indian firms, which anticipate slower profit growth, have paid 22 percent less advance tax to the government during the December quarter, compared to year-ago figures.

“The direct tax collection touched 2,47,000 crore (2.47 trillion) rupees as on Feb. 1, growing by 12.5 percent,” said S.S.N. Moorthy, the chairman of Central Board of Direct Taxes.

Direct tax receipts, which were up 39 percent until the June quarter, began to slow as the global financial crisis started pinching Indian companies.