Direct tax collections show robust growth of 26% in current fiscal

NEW DELHI: Indirect tax collection rose a robust 24% in August from a year ago, belying the industrial slowdown suggested by index of industrial production.

IIP growth dropped to a 21-month low of 3.3% in July as manufacturing expanded by a measly 2.3% from a year ago.

The excise levy - considered a good indicator of manufacturing activity as it is imposed the factory gate - rose 19.7% in August.

"Revenue trend has been encouraging. We are confident of meeting the collection target," SD Mazumdar, chairman, Central Board of Excise and Customs told ET.

Plummeting industrial growth had fueled apprehensions of indirect taxes collection coming under pressure and government missing the target of 4 lakh crore, an increase of 17.3% from last year, set for the current fiscal.

"There may have been some sectoral moderation but we are nowhere near a full-blown slowdown. Indirect taxes collections and export numbers are more reliable," said Abheek Barua, chief economist, HDFC Bank.

Similar trend was seen in Customs duty, which grew by 13.4% in August, 2011, despite the rejig in duties on petroleum products.

The duty reduction that included reduction in central excise duties is expected to cost the government 35,000 crore in revenues in the current fiscal.

Service tax collections grew by a whopping 57.3% in August 2011, corroborating the 10% rise in the services in the first quarter.

Mazumdar, however, attributed the rise to emphasis on stringent administrative measures, such as attachment of property, taken by the department to boost collections.

The direct tax collections were up 26% in the first five months of the current fiscal though net tax collections were down to 96,738 from 100,113 crore a year ago because of a 154% increase in tax refunds.