The revival of the industrial sector has translated into higher revenues for the exchequer with the government?s indirect tax collection up by around 46% to over Rs 1.24 lakh crore during the first five months of this fiscal.
The indirect tax department has collected Rs 51,866 crore as customs duty during the April-August period this year, almost 67% up when compared to the last year corresponding period. Riding on a booming manufacturing sector, excise duty collections have also registered a growth of 42% to around Rs 49,700 crore, sources told FE.
Service Tax collections during the period is around Rs 22,700 crore, up 20% when compared to last year. The figures could be even higher, sources said.
The good collection numbers can be attributed to a the galloping industrial production during the period. Industrial production moved up sharply to 13.8% for July, much above market expectations of around 7.8%.
Capital goods production jumped by 63% and was the major source of the sharp increase in IIP for July, from a downwardly revised 5.8% for June. Sectors such as consumer non-durables however are still under-performing with a growth of 0.5% for July,even as consumer durables segment grew by around 22% in the same month.
The government has set a tax collection target of Rs 3.15 lakh crore for the financial year 20010-2011. The recovery in tax collection started lasy fiscal itself when the government breached the collection target of Rs 2.44 lakh crore to collect almost Rs 2.67 lakh crore.
The robust growth in indirect tax collections signal that aggregate demand is strengthening further even as it indicates strong sales growth going forward. This could add further momentum to stock markets as earnings are expected to grow further. The 30-share Sensex of the Bombay Stock Exchange ended up 2.17% at 19,208.33 points on Monday–a 32-month high.
The 50-share Nifty of National Stock Exchange ended up 2.13% at 5,760 points, as investors cheered robust July factory output data, with firm world markets also boosting sentiment.