Excise duty collections rose 9.7 per cent to touch Rs 1.05 lakh crore.
Probably reflecting some turnaround in manufacturing activity, growth in excise duty collection rebounded to positive territory in December after slipping into a negative zone in November and September, year-on-year.
Together with robust customs duty and service tax collections till December, this has raised hopes in the finance ministry of meeting the budget target on at least the indirect tax front, when other areas are witnessing slippage. However, the customs duty collections rose at a moderated rate of just over four per cent in December against the high growth in earlier months, which may reflect decelerating import growth in value terms and cut in duty rates on petroleum products. Indirect tax collections rose 15.9 per cent in December at Rs 34,819 crore against Rs 30,054 crore in the same month last year. For the first nine months of this financial year, indirect tax collections grew 16.1 per cent to Rs 2.86 lakh crore on a yearly basis.
We expect we will be able to realise the Budget estimates of Rs 3.93 lakh crore, despite the fact that we are not going to get about Rs 36,000 crore due to cuts in customs and excise duty on petroleum products, said S K Goel, chairman of the Central Board of Excise and Customs to reporters here.
In the first nine months of 2011-12, the government collected 72.7 per cent of the budget target. Though Goel refused to say if the revised estimates would be higher than Budget estimates for this year, a ministry statement said: At the present rate of growth, we should be able to achieve or exceed the Budget target.
Excise duty collections, which contracted 6.5 per cent in November and 8.7 per cent in September, rose 9.7 per cent in December to touch Rs 1.05 lakh crore against Rs 97,819 crore in the corresponding period of the last year.
However, there is no one-to-one link between excise duty and industrial activity. For instance, October showed industrial production falling by 5.1 per cent year-on-year and manufacturing by over six per cent. However, excise duty was up 5.1 per cent in October. Also, there are expectations among analysts that industrial production in November would not replicate Octobers contraction but would show growth. Novembers Index of Industrial Production data is expected on Thursday.
There is a correlation between excise duty collections and industrial performance. We need to see these numbers and not jump to conclusions from a one-month data, CARE Ratings chief economist Madan Sabnavis told Business Standard. Goel explained when a year is about to close, small-scale assessees start paying taxes after they cross the threshold of Rs 1.5 crore of turnover.
After the excise duty plunged in November and September, the CBEC chairman had said he would meet officials concerned to assess the duty mop-up.
To a query on this, he said, I had a meeting of officials and chief commissioners. We decided to work in a streamlined manner and whatever recovery we could make, including disputed cases, we should focus on audit.
Service tax collections remained robust. It grew 48.6 per cent in December to Rs 9,665 crore from Rs 6,505 a year ago. In the first nine months, service tax mop-up rose 37.2 per cent to touch Rs 67,706 crore.
As for customs duty, growth in collections moderated to just 4.1 per cent in December at Rs 12,608 crore against Rs 12,109 crore a year before. For the first nine months, collections from this duty delivered Rs 1.13 lakh crore to the exchequer, up 13.8 per cent year-on-year. This clearly showed customs duty had come down.
The collections from indirect taxes are significant in view of the not-so-robust collection under the direct tax kitty. The government has collected Rs 3.24 lakh crore till December from direct taxes or 60 per cent of the target set at Rs 5.32 lakh crore for 2011-12 in the Budget.
Meanwhile, finance minister Pranab Mukherjee on Tuesday reviewed tax collections at meetings with the CBEC chairman and with the chairman of the Central Board of Direct Taxes, M P Joshi, besides tax commissioners of the northern zone. He asked them to expedite realisation in the remaining part of the financial year.
Disinvestment is not moving at the expected pace. Against the years target of Rs 40,000 crore, the government has just over Rs 1,100 crore, through divestment in only one public sector enterprise. The governments plans to devise innovative methods were postponed in the Cabinet meeting last week.
Due to a shortfall in receipts over the budget targets and also against expenditure, the fiscal deficit has already touched 86 per cent of the goal set for 2011-12, in just eight months. The widening deficit forced the government to go for Rs 93,000 crore of additional market borrowing.