Current Issues in Business

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Current issues in business

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NAME: sudhanshu shekhar mishra

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Indirect Tax Collection on Target Despite Ups & Downs in Growth

Mopup rises 16% in Dec; touches 72% of the budgeted . 3.97 l cr for FY12 in first three quarters of FY12

OUR BUREAU NEW DELHI

The government seems on course to achieve, or even exceed marginally, its indirect taxes collections target for the current financial year despite the economic slowdown.

With a quarter to go, indirect tax collections have touched 72% of the budgeted . 3.97 lakh crore for the current fiscal, data released by the government on Tuesday showed.

"We are confident of achieving the budget estimates," S K Goel, chairman, Central Board of Excise and Customs told reporters.

The government is struggling to contain the fiscal breach to the minimum after its tax assumptions went awry because of the economic stress. However, most of the damage has been in the direct tax collections, which have, after refunds, grown just over 7% in the first eight months of the fiscal.

Indirect tax collections grew at 16% during December 2011 over the previous year.

Indirect tax collections have been surprisingly robust despite industrial production growth slumping into negative in October and government cutting import duty on crude and petroleum products to cushion the impact of rising crude prices.

Excise duty, a tax levied at the factory gate and a leading indicator of production of goods, bounced back strongly in December indicating a revival in manufacturing growth after a 5.1% contraction in October.

The economy is expected to slow to about 7% this fiscal, against 8.5% in the previous year, Prime minister Manmohan Singh has said.

"December has given positive news particularly on the Central Excise front, as the collection increased by 9.7% after registering a decline in November," Goel said.

A rise in core sector growth to a four-month high 6.8% in November also suggests some revival.

Economists are also viewing the revival in excise collections with optimism. "The December numbers are healthy and come as a positive surprise. Even PMI suggests that output in the month had picked up," said Shubhada Rao, chief economist, Yes bank. "But it's too early to call this a turnaround in slowing industrial