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Revenue authorities have announced an over 37 per cent jump in indirect tax collection during the first three months i.e. April-June of the current fiscal. Indirect tax comprises Custom Duty (levied on export and import of the goods), Central Excise Duty (levied on domestic manufacturing) and Service Tax (levied on various services).
According to the Finance Ministry, indirect tax collection increased to Rs 1.54 lakh crore as against Rs 1.12 lakh crore during the corresponding period of the previous fiscal. This shows an increase of 37.4 per cent. This increase has been recorded despite the industrial production figure for April-May (released on Thursday) showing a decline in growth.
However, the Ministry has a different view. “These collections indicate that the underlying momentum in the economy is improving across all sectors, including manufacturing, reflected in healthy excise tax collections,” it said in a statement. Though, it did admit that these collections reflect in part additional measures taken, including the excise increases on diesel and petrol, the increase in clean energy cess, the withdrawal of exemptions for motor vehicles and consumer durables, and in June, the increase in service tax to 14 per cent from 12.36 per cent.
“Stripped of all these additional measures, indirect tax collections increased by 10.8 per cent in June 2015 over June 2014, and by 14.5 per cent for the first quarter of FY2015-16 compared to the first quarter of FY 2014-15,” the Ministry said while adding that the growth in underlying indirect tax collections of 14.5 per cent suggests a healthy increase in nominal GDP growth, which constitutes the tax base for indirect tax collections.
Meanwhile, Ministry officials said direct taxes (personal income tax, corporate tax, wealth tax and securities transaction tax) collection during the first three months of the current fiscal has been ‘flat.’ “It is quiet normal as the first instalment of advance tax by corporates is normally very high, then refund also happens during the first two months,” a senior Ministry official said while hoping that things would improve in the remaining period of the current fiscal.
The Finance Ministry has set targets of Rs 7.98 lakh crore for direct tax and Rs 6.46 lakh crore for indirect tax for the current fiscal.
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