India’s indirect tax collections rose over 27% to R1.08 lakh crore during April-July this year as compared to the corresponding period last fiscal, signifying that the slowdown in industrial activities has not yet dented revenue collections.
However, experts say that in the coming months, the momentum in tax collection might be impacted. A slowing of industrial output could impact excise revenue while a likely fall in global commodity prices would retard the growth in customs collections.
The excise mop-up in the first four months of the current fiscal was up 22% at R36,475 crore. As per the provisional figures, customs collection rose by 30% to R50,705 crore in the first four months of the current financial year.
The service tax mop-up during April-July this year stood at R21,598 crore, a rise of 30% over the year-ago period, according to sources.
Ernst and Young tax partner Harishanker Subramaniam said that the growth in indirect tax collection has been excellent so far.
However, there could be some moderation in the revenue growth in the coming months. “I expect some slowdown in excise duty collection while we have to wait and watch the trend of customs duty in the coming quarters. The service tax mop-up is expected to sail through,” he said.
The concern on the revenue front was shown after industrial output growth dipped to 5.6% in May which finance minister Pranab Mukherjee had said is “not encouraging” and the government is taking steps to boost the manufacturing sector.