Indirect tax collection growth shows economy improving: CEA Arvind Subramanian

NEW DELHI: The Finance Ministry today said a steady 37 per cent growth in indirect tax collections in four months to July reflects that underlying momentum in the economy is improving.

"These collections indicate that the underlying momentum in the economy continues to improve across all sectors," Chief Economic Advisor Arvind Subramanian told reporters here.

Indirect tax revenue jumped over 37 per cent to over Rs 2.1 lakh crore in April-July of the current fiscal on the back of higher excise duty mop-up.

"The growth in underlying indirect tax collection... for the first four months... suggest increase in nominal GDP growth," Subramanian said.

The excise duty collection reflects hike in excise duty on diesel and petrol, withdrawal of exemptions for motor vehicles and the increase in service tax in June.

" It also includes Customs collections data, which have also been helped by rupee depreciation of 6 per cent between April and July," he said.

In April-July, the excise collections jumped 75.4 per cent to Rs 83,454 crore. While revenues from service tax rose 20.1 per cent to Rs 60,925 crore, those from Customs surged 21 per cent to Rs 66,076 crore.
The Chief Economic Advisor said the growth in underlying indirect tax collections (excluding the additional revenue measures) of 14.6 per cent for the first four months of fiscal suggests a "healthy increase in nominal GDP growth".

Subramanian said the indirect tax collections between April-July reflect in part additional measures taken, including the excise increases in diesel and petrol, the increase in clean energy cess, the withdrawal of exemptions for motor vehicles and consumer durables, and in June 2015, the increase in service tax from 12.36 to 14 per cent.

"Stripped of all additional revenue measures, indirect tax collections increased by 15.2 per cent in July 2015 over July 2014, and by 14.6 per cent for April-July 2015 compared to the April-July 2014," he added.

For July 2015, indirect tax collections increased by 39.1 per cent on year-on-year basis. Cumulatively for April-July 2015, the indirect tax collections increased by 37.6 per cent over the same period last year.