Indirect tax collections in October dropped by 2.5 percent to Rs 30,278 crore mainly on account of a slowing economy and cut in customs and excise duties on petroleum products a few months back.
    
Indirect tax revenue comprising customs, excise and service tax was at Rs 31,058 crore in October 2010.
 
Realisations from customs dropped by 11.6 percent in October to Rs 11,357 crore, from Rs 12,849 crore in the year ago period, Finance Ministry sources said.
    
The central excise collections dropped 5.3 percent to Rs 10,527 crore from Rs 11,120 crore in October 2010.
    
In June, the government had 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 49,000 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, the sources said.
 
Service tax collections during the month rose to Rs 8,394 crore from Rs 7,089 crore in October 2010.

However, 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 the last financial year.
    
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 86,156 crore (up from Rs 73,895 crore during corresponding period of last fiscal), central excise at Rs 69,511 crore (Rs 62,838 crore) and service tax at Rs 45,391 crore (Rs 33,977 crore).
    
The decline in indirect tax collection during the later part of the financial year 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 moderated to 5.6 percent from 8.7 percent during the corresponding period in 2010-11.
 
The government in June had reduced customs and excise duties on petroleum goods, sacrificing revenues to the tune of Rs 49,000 crore during the fiscal.
 
It is targetting an 18 percent year-on-year increase in indirect tax collection at Rs 3.98 lakh crore for this fiscal.