The government's tax coffers are getting an industrial boost. On the back of rising industrial growth numbers, the government's excise, customs and service tax collections for the month of January this fiscal seem to have turned a corner.
Total indirect tax collections in January have grown by over 15 per cent as compared to the same period last year at over Rs 22,000 crore.
During the month, excise collections rose by 25 per cent at over Rs 9000 crore while customs collections went up by 23 per cent at over Rs 7000 crore.
However service tax has shown a dip due to the tax rate being lower this fiscal as compared to the previous year, the collections for jan stand at Rs 5900 crore.
Analysts say while one reason is the heavy cut in the excise duty and the CVD by 4 per cent last December. The fact remains industrial demand is picking up.
The numbers are strong, especially excise. Also, I would not worry too much in terms of the difference with the budget target and the overall collections, since the main laggard is customs, which has also been affected by the exchange fluctuation,'' says Pratik Jain, executive director of KPMG.
The overall collections for this year are still down.
The government's indirect tax kitty has been able to net Rs 189,000 crore up to January this fiscal that is still over Rs 30,000 crore less than last year. And achieving the BE of 2 lakh, Rs 70,000 crore is now a very stiff target.
Looking at the latest indirect tax collections, the case for a partial rollback of the excise and service tax rates probably looks stronger.
Also the huge gap which the government will face in terms of missing its indirect tax collection target might just prompt the finance minister to go ahead with this decision.
But whether it will be February 26, the Budget day itself, or would the finance minsiter prefer to wait till April-May, the time when the budget is finally passed by the parliament, remains to be seen.