Indirect tax mop-up jumps 43% in Apr-Dec

NEW DELHI: Excise duty collections registered a smart 29.5% rise in December 2010 from a year ago, allaying fears of a slowdown in manufacturing growth. Excise duty is a levy imposed on the production of goods. Analysts had expressed concerns of a slowdown in the sector after manufacturing growth fell to 2.3% in November. Industrial output growth had plummeted to 2.7% in the same month.

But excise collections of 11,297 crore in December seems to have addressed those concerns. Other indicators, such as the purchasing managers' index, sales of consumer durables and non-durables, substantiate the robust manufacturing growth, which for some reason is not being captured in the industrial production numbers.

Sales of fast moving consumer goods, or FMCG, grew 16% in 2010 as per industry estimates.

Overall indirect tax collections increased by 42.8% during April-December, indicating that the government was on course to exceed the budget target for the year. Customs collections grew by a whopping 75.7% to 12,986 crore in December.

Although customs collections have benefited from the upside of higher crude prices, growth in non-oil imports have also contributed substantially, according to a government official.

He said capital goods imports have grown as shown by the customs duty collections, indicating a positive trend in corporate investments. Service tax collections grew 27% to 5,154 crore in the month under review.

The overall collection of 2,37,192 was 75.7% of the Budget Estimates for the fiscal 2010-11, giving comfort to the government that is counting on buoyancy in revenue collections to meet enhanced expenditure.

Nearly all subsides, including those petroleum products, fertilisers and food, are expected to exceed the amount the government had budgeted in its February 2010 budget.

Crude prices are now hovering around $100 a barrel, which will mean a much higher subsidy burden on the government.

Fertiliser prices in the international markets are also on the rise, forcing the department of fertiliser to seek Rs 30,000 crore of extra subsidy in the current fiscal.

The Rs 65,000-crore revenue from the sale of third-generation (3G) airwaves and broadband spectrum has already been accounted for through two supplementary demands. The government has proposed an additional spending of Rs 75,000 crore through the supplementary demands.