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  3. Centre likely to raise duties to garner more revenue

Centre likely to raise duties to garner more revenue

05 Nov 2012 Evaluate

Amid sluggish revenue collection so far and as Rs 35,000 crore dip in indirect tax collection is anticipated this fiscal, the Ministry of Finance is reported to have started looking into several measures to shore up revenue, including raising tariff rates in both customs and excise for a few items which are below the peak duty rates. The ministry is planning to hike the effective rate to the tariff rate level, as the action does not require Parliament’s approval. The effective rates are duty rates which are scaled down below tariff rates, in view of exempting certain goods in public interest.

The decline in revenue collection during the last financial year marked at Rs 2, 12,167 crore, about 10.37% increase with respect to 2009-10. The centre points out that financial slowdown has largely impacted the revenue collection, while indirect tax mop up growing 15.6% to Rs 2.17 lakh crore in the April-September period against the annual target of 27%. As, the excise duty collection during the period amounted to Rs 80,000 crore, with customs duty mop up about Rs 77,000 crore and the service tax collection notched Rs 60,000 crore during the period.

Amid current sluggish economic condition, Vijay Kelkar committee has opined that the gross revenue collection during 2012-13 might dip by Rs 60,000 crore, even though the centre has envisaged the indirect tax collection to reach at Rs 5.05 lakh crore in the current financial year, nearly 27% climb from 2011-12 target. The industrial output growth during April-August 2012-13 has marked 0.4%, compared to 5.6% same month last year.

Shortfall in revenue realization has concerned the government, albeit it has revised the fiscal deficit target to an ambitious 5.3% as against 5.1% budgeted for the current fiscal. The direct tax collection for the first six months this fiscal has attained only 5.87% increase year-on-year with Rs 2.72 lakh crore, while to attain the target of Rs 5.7 lakh crore this year, a hike of 15% is needed.

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