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  3. October’s indirect tax collections declines by 2.5%

October’s indirect tax collections declines by 2.5%

09 Nov 2011 Evaluate
The slowdown in economic activities has affected the revenue collection of the government. The indirect tax collections during October 2011 declined by 2.5% to Rs 30,278 crore compared to Rs 31,058 crore in October 2010.

As per the finance minister official, during October 2011, collections from customs plunged by 11.6% to Rs 11,357 crore from Rs 12,849 crore in October 2010. The central excise collections also declined by 5.3% to Rs 10,527 crore in October 2011 from Rs 11,120 crore in same period of last year.

In June 2011, the government had cut the customs and central excise duties to give relief to common man from the hike in petrol prices. The slash meant an annual loss of Rs 49,000 crore to the government.

Finance minister official said that the decline in the total indirect tax collection in October would have been much sharper but for the 18.4% growth in realization from service tax. During October 2011, the service tax collection increased to Rs 8,394 crore to Rs 7,089 crore in October 20120.
 
However, in the first seven months of the current financial year, indirect tax collection increased by 17.8% to 2.01 lakh crore from 1.70 lakh crore in the April-October 2010. This surge in revenue collections was because of the higher collections from customs, central excise and service tax which increased by 16.6%, 10.6% and 33.6% respectively.

In April-October 2011, custom collection was Rs 86,156 crore compared to Rs 76,895 crore in the corresponding period of last fiscal, central excise at Rs 69,511 crore from Rs 62,838 crore and service tax surged to Rs 45,391 crore from Rs 33,977 crore.  

The government is aiming an 18% y-on-y increase in indirect tax collection at Rs 3.98 lakh core for 2011-12. However, experts have the view that the in remaining months of current financial year, indirect tax collections may experience decline because of the slowdown in industrial activities and the government’s decision of reducing duties on petroleum products to partly offset the impact of increase in price on consumers.
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