The stimulus may have helped India Inc tide over the financial crisis faster than other countries but at the same time, it is giving a tough time to the apex indirect tax body, Central Board of Excise and Customs (CBEC), which is under pressure to mop up about Rs 40,000 crore with only March left for the fiscal year to end.
Despite economic recovery being visible, the task of even meeting the revised indirect tax collection estimatesexcise, customs and service taxis immense, with the April-February collections this fiscal witnessing an a decline of over 12% compared to same period last year, according to data available with FE.
The government has collected only Rs 2,09,973 this fiscal till February, which is 12.26% less than what it had collected in the corresponding period last year. The average collections in a month has been around Rs 20,000 crore so far this year, while in March the CBEC would need to double it to Rs 40,000 crore.
Though the manufacturing sector, especially automobile, steel and cement, has improved compared to last year with the decline in the collections only at 7% to Rs 88,709 crore even after the tax rate cuts that started in December last year, customs collections have seen a whopping dip of 21% to Rs 74,088 crore in the April-February period, compared to the same period last year.
The services sector that the government usually bets on in times of poor indirect tax collections, has accounted for Rs 47,176 crore6% less that last year in the same period. The revised estimate in Budget 2010-2011 pegged the collections at Rs 58,000 crore.
The total target for indirect tax collections for the financial year 2010-2011 has been revised at Rs 2.44 lakh crore which seems like a difficult one to meet.
The tax collections are usually on a higher side in the month of March and dips again in May and June so we can expect a higher tax collection in the month.
But this time the firms would also use the accumulated cenvat credit so the tax mop-up may not drastically improve, an official told FE.
The collections, he added may be slightly better as the collections figures that have now been compiled are a telegraphic summary that tend to be on the lower side.
The main reason for the dip in taxes has been due to the duty cuts in customs and excise and service tax that the government had doled out to the industry in three tranches to tide over the financial crisis .
Though this time finance minister Pranab Mukherjee while presenting the budget for 2010-2011 partially rolled back the stimulus by hiking the excise duty rates back by 2%, He had noted that the signs of economic recovery are quite visible unlike the last budget when the country was faced by a financial crisis.