In past ten years, India has developed the small centers of growth in different parts of the country in the form of smaller cities. The infrastructure development and rising salaries of middle class professionals in many cities, other than metro cities, have resulted in the larger generation of direct taxes from these cities.

Mumbai, the financial capital of the country, may be at the top in the list of cities paying the direct taxes to the government but smaller cities such as Chandigarh, Lucknow, Kanpur have been placed in the list catching up fast with many metro cities.

The collections of direct taxes, corporate tax and income tax in these cities have gone up by recording 25-78 per cent growth against a target of 9-20 per cent in the previous year.

A senior Finance Ministry official said:

Smaller cities have shown a considerable growth in tax collections because of the addition of high salary jobs in the IT, real estate, auto, finance and retail sectors.

The rising salaries have resulted in rise in tax collections too and this year the tax collection was even beyond the expectations.

According to the report, the government had collected Rs 60,970 crore till August 31 2007 and smaller cities have contributed more than one-third of the total tax collections. The higher percentage growth is coming on the back of a lower base because of the increasing financial activities in smaller towns and cities across India.

Uttar Pradesh is said to be the economically backward state but the Lucknow region has shown a growth of 78.57 per cent in tax collections this year. The expected target was 19.16 per cent but it went up to 78.57 percent within a year. The corporate tax collections have gone up to Rs 182 crore as against Rs 76 crore registered in previous year.

Kanpur region has also shown a similar kind of growth story as the tax collections have gone up by 62.28% against the target of 18.14% this year. The collections of direct taxes have expected to touch Rs 1,09,000 crore till September 15 this year.

Chandigarh region has shown the growth in income tax collections to 66.29% to Rs 1,236 crore till August 2007. It was Rs 743 crore in the duration in last fiscal.

However, the Guwahati region showed a decrease in tax collections to Rs 330 crore. Last year, the tax collection had touched Rs 396 crore in the same duration last year. This indicates that industries are not doing well in the region, they said.

According to the report, the gross tax collection is likely to cross Rs 1,26,000 crore by September 15 2007. It had touched Rs 94,000 crore-mark in the same period last year. However, the government has set a target to collect Rs 5,48,122 crore as taxes against the estimate of Rs 4,67,848 crore in the last fiscal by showing 17% growth in tax collections.
Another report has revealed that the corporate India has planned to extend the organized retail business in rural part of the country worth of $100 billion as well.

The Industrial houses are being ready with the innovative schemes, the concrete plans and better human resource policies to get their own share in the 100-billion dollar market in rural India.

The reason behind the sudden change of direction from the urban India to rural India is the unimaginable market growth in the rural markets. According to the data, the rural markets are growing at double the rate of the growth of urban markets. The growth rate has forced the corporate India to concentrate on rural retailing market.

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