Drop in excise duty mop-up impacts indirect tax collection

Six months into the fiscal year, the Centre’s indirect tax mop-up has not even reached the halfway mark of the budgeted Rs 5.65 lakh crore. The indirect tax collections in the April-September period (2013-14)  stood close to Rs 2,29 lakh crore.

The sluggish tax collection was mainly on account of a 6 per cent drop in excise duty mop-up in the six-month period, according to ministry officials. A drop in excise collection is an indication of slowdown in manufacturing activity in the country.

Customs mop-up was up 10 per cent to Rs 80,550 crore during the period.

Service tax collection, which has become a new focus area for revenue officials, grew by 16 per cent to Rs 59,000 crore.

In September, total indirect tax collection stood at Rs 42,700 crore, up 13 per cent from the same month last year.

Weak industrial output in the past as many months has led to a drop in excise collection, an official said. The budget for this year had estimated 11.9 per cent growth in excise collection this years.

The Finance Ministry, however, is expecting collections to pick up in the coming months led by a growth in industrial output in July and August after a two-month contraction, stimulus to the automobile and consumer durables sector by way of additional capital to banks and higher GDP growth in the last two quarters. The pick up in industrial output is expected to reflect in taxes from October.