The Income Tax Department reported an increase of 20% in tax collection the last quarter. Direct taxes, automatically deducted from payroll, jumped 27% and indirect taxes by 16.2%. The increase in payroll taxes despite sharp rise in exemptions shows that the taxation net has widened. Corporate taxes increased by about 21%. Two controversial taxes, the Fringe Benefit Tax (FBT) and the Bank Cash Transaction Tax brought in both that Rs. 3 billion. With such data and given a shortage in Government income affecting social projects, it is unlikely that the Government will drop these controversial and unpopular taxes. India signed a Double Tax Avoidance Convention with Serbia and Montenegro covering income taxes, surcharge on income, and wealth tax for India and profit tax, income tax, capital tax, and revenue tax for Serbia and Montenegro.

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