The Centre’s revenue from excise, customs duty and service tax grew an impressive 37.6% in April-July this year to Rs 2.1 lakh crore, reflecting an uptick in consumption in certain sectors besides the increase in collection from hikes in tax rates, and withdrawal of a stimulus to consumer goods and automobiles.
Service tax was hiked to 14% from 12.36% effective June this year while the excise duty was increased marginally to 12.5% from 12.36% in the Budget.
These and the withdrawal of stimulus (concessional tax rates) to automobiles and consumer goods contributed to the surge in indirect tax collections. In the case of service tax, for instance, the growth in collections in April-July would have been nearly half the actual growth reported of 20.1% if the rate hike hadn’t occurred, analysts said.
Indirect tax receipts growth of 39.1% seen in July is better than the 33.3% recorded in June, but below the 46.2% recorded in April.
According to experts, consumption in sectors like automobiles — car sales recorded a 17.47% growth in July — is expected to sustain the trend in tax revenue, although the low fuel prices would have a negative impact on collections.
The government has set a target of collecting R6.46 lakh crore from excise, customs and service tax this year, an 18.8% growth from last year’s receipts. Collections so far represent 32.6% of the budgeted revenue target.
The department collected R56,739 crore of indirect taxes in July, said a finance ministry statement. The government had increased the clean energy cess from R100 to R200 per tonne of coal from April this year and the service tax rate from 12.36% to 14% from June.
The impressive figures for indirect tax receipts in the initial months also partly reflect the statistical effect of the dismal 3.9% growth recorded in the same period a year ago.
Central excise collection, which had grown 112% in April this year, moderated to 64.8% in July, but posted a cumulative 75.4% growth in the first four months of the fiscal. The finance ministry takes it as a strong underlying trend in growth revival. Collections stood at Rs 83,454 crore at the end of the four month period.
Receipts from customs duty grew 23.2% in July at Rs 18,996 crore. In the April-July period, receipts from customs duty grew 21% to Rs 66,076 crore.
Collection from service tax grew 30.3% in July to Rs 15,470 crore. Cumulatively, service tax collection grew 20.1% so far this fiscal to Rs 60,925 crore.