The slow down in the industrial sector has finally taken a toll on indirect tax collections. The collections dropped 2.5 per cent in October to Rs 30,278 crore, raising apprehensions if the government will be able to stick to its budget estimate.

Customs collections fell 11.6 per cent to Rs 11,357 crore in October, while excise duty collections fell for the second month in a row by 5.3 per cent to Rs 10,527 crore. Services tax collections, however, remained buoyant, growing over 18 per cent to Rs 8,394 crore. Experts said the much-feared deceleration in growth is visible now.

The growth of factory output during September stood at 2.3 per cent, as against 3.7 per cent during the same period a year ago. The Index of Industrial production during April-August moderated to 5.6 per cent from 8.7 per cent during the corresponding period in 2010-11.

Similarly, decline in capital investment has hit customs collection.

Manufacturing is going down. There is some amount of industrial slowdown. Only the service sector is growing. But I would say it is a mixed bag and still too early to say that we would not be able to meet the target, Bipin Sapra, partner, E&Y, said. Also, lower collections is partly due to the cut in customs and excise duties on petroleum products in June. The government had slashed customs and central excise duties to provide relief to consumers from the hike in petrol prices, foregoing revenue to the tune of Rs 49,000 crore.