Indirect tax mop-up rises 10% in April

Written by Subhash Narayan | Bijay Shankar Patel | New Delhi | Updated: May 16 2012, 08:50am hrs
The Centres indirect tax collections have risen 10% in April to R32,000 crore as against just over R29,000 crore garnered in the same month of the previous year. Coming on top of a 3.5% contraction in industrial production in March, the 10% rise in indirect tax revenue in the first month of the current fiscal was somewhat reassuring.

Indirect tax collection grew 14% in 2011-12.

Excise revenue grew an impressive 18% to R12,500 during the month under review as against R10,600 during April, 2011.

The higher excise collections in April, partly attributable to the hike in duty to 12% in the Budget, reflects better health of the industry and could signal a likely pick up in IIP growth in April, said a finance ministry official.

We hope that a pick up in infrastructure activities in the country would give much needed fuel to the manufacturing sector in the coming months, said a top official of public sector enterprises asking not to be named.

The poor IIP numbers for March is just one in a series of bad news for the economy coming lately. After moderating in previous months, headline inflation has again risen in March to 7.2%. GDP growth has slowed down to 6.1% during the quarter ended December, 2011 fueling speculation that 2011-12 growth may be even below expected level of 6.9%.

Axis Bank economist Saugata Bhattacharya, however, termed rate hike as the main reason for the excise growth without having any bearing on the improving health of the industry. Most of the growth is happening in industries where there is no excise duty. The increased excise collections is on the expected lines but is a little slower as it dies not fully captures the 20% increase in duty in this years budget.

The indirect tax figures for April, also indicates the continued fast paced growth of the services sector. Service tax collections during the month rose 35% while customs duty by 8%.