Good news: Taxman's take shows economy is looking up

Is the economy turning around?

The uptick in indirect tax collections suggests that the worst may be over. Belying concerns of a slowdown, indirect tax collections increased 16.1 percent to Rs 2,85,787 crore during April-December, mainly driven by an uptick in service tax mop-up. Services constitute the largest segment of the economy - over 60 percent.

[caption id=“attachment_178039” align=“alignleft” width=“380” caption=“Belying concerns of a slowdown, indirect tax collections increased 16.1 percent to Rs 2,85,787 crore during April-December, mainly driven by an uptick in service tax mop-up.”] [/caption]

Total collection of indirect taxes - customs, excise and service tax -was Rs 2,46,168 crore in the same period last year. “We hope we will be able to meet the budget estimates of Rs 3,92,908 crore (from indirect taxes) this fiscal,” the chairman of Central Board of Excise and Customs (CBEC), SK Goel, told reporters while releasing the data.

The indirect tax collection in the first three quarters of 2011-12 is about 72.7 percent of the budget estimates. The collection has shown a growth despite the government’s decision to forgo Rs 36,000 crore of revenue on account of customs and excise cuts on petroleum products.

The levies were slashed in June to provide a cushion to consumers against the hike in prices of diesel, kerosene and LPG. The tax mop up in December was Rs 34,819 crore, up 15.9 percent from Rs 30,054 crore in the year-ago period.

“December has given a positive news, particularly on the central excise front, as the collection increased by 9.7 per cent to Rs 12,546 crore (year-on-year),” Goel added. The growth in excise collection is a positive, he said, as the mop up had declined 6.5 percent in November and 8.7 percent in September. It had shown a growth in October.

Goel further said that service tax collection continues to be strong and has shown 48.6 percent expansion in December to Rs 9,665 crore from the year-ago period. There had been concerns on the economic growth prospects of the country in the wake of high cost of credit, coupled with the global scenario. The economy is expected to slow to about 7 percent this fiscal, against 8.5 percent in the previous year.

Collections of customs duty increased to Rs 12,608 crore in December, up 4.1 percent from Rs 12,109 crore in the same month of 2010. During April-December, customs collections were Rs 1,12,670 crore, up 13.8 percent year-on-year.

Expressing hope that excise duty mop-up will further increase in the remaining months of the fiscal, Goel said officials have been asked to further streamline the collection process. When asked how collections had improved in December, he said small businesses had started paying the levy.

Besides, businesses which had exhausted their Cenvat credit were now paying the tax in cash. Excise collections in December totalled Rs 12,546 crore and in the last three quarters the amount was Rs 1,05,411 crore.

Service tax collection in December was Rs 9,665 crore and during April-December Rs 67,706 crore. The CBEC chief also said that the extension of the filing date to 6 January had helped increase the collection of levy. He indicated that the deadline for service tax payments may be further extended.

The board has achieved 74.3 percent, 66.2 percent and 82.6 percent of the budget estimates for customs, central excise and service tax, respectively.

Finance Minister Pranab Mukherjee on Tuesday met Central Board of Direct Taxes (CBDT) and CBEC officials of North Zone to take stock of tax collections and asked them to further increases the realisation. The revised budget estimates for both direct and indirect taxes are higher. The revenue collection estimate is Rs 7,89,000 crore.

With inputs from PTI