Indirect Tax Collections in October 2011 dropped by 2.5 percent to Rs 30278 crore

Indirect tax collections in October 2011 dropped by 2.5 percent to Rs 30,278 crore on account of a slowing economy and cut in customs and excise duties on petroleum products. Indirect tax revenue comprising customs, excise and service tax was at Rs 31058 crore in October 2010.

Realisations from customs dropped by 11.6 percent in October to Rs 11357 crore, from Rs 12,849 crore in October 2010. The central excise collections dropped 5.3 percent to Rs 10527 crore from Rs 11120 crore in October 2010. Service tax collections in october 2011 rose to Rs 8,394 crore from Rs 7,089 crore in October 2010.

The government had in June 2011 slashed customs and central excise duties to provide a relief to consumers from the hike in petrol prices that month. The cut meant an annual loss of Rs 49000 crore to the central exchequer. The decline in the total indirect tax collection in October would have been much sharper but for the 18.4 percent growth in realisation from service tax.

April-October period of 2011

During April-October period, the indirect tax collection showed 17.8 percent increase to Rs 2.01 lakh crore from Rs 1.70 lakh crore during the corresponding period in 2010-11. The increase during the first seven months of the current fiscal was on account of higher collections from customs, central excise and service tax which rose by 16.6 percent, 10.6 percent and 33.6 percent, respectively.

During the April-October period customs collection was Rs 86156 crore (up from Rs 73,895 crore during corresponding period of last fiscal), central excise at Rs 69511 crore (Rs 62,838 crore) and service tax at Rs 45391 crore (Rs 33,977 crore).

The decline in indirect tax collection that followed can be attributed to poor performance of the industrial sector as well as the government decision to reduce duties on petroleum goods to partly offset the impact of price hike on consumers.

Industrial production during April-August period of 2011-12 moderated to 5.6 percent from 8.7 percent during the corresponding period in 2010-11.

The government is targetting an 18 percent year-on-year increase in indirect tax collection at Rs 3.98 lakh crore for 2011-12 fiscal.