First quarter tax collection figures belie fears of economic slowdown
July, 07th 2011
Belying slowdown fears, the governments net indirect tax receipts recorded 32 per cent increase to Rs 76,499 crore, while gross direct tax collections rose about 23 per cent to Rs 1,03,000 crore in the first quarter ending June 2011. Net direct tax receipts, however, showed about 17 per cent dip to Rs 57,000 crore on account of about 200 per cent increase in tax refunds.
The preliminary data accessed by Business Standard showed the growth in net indirect tax collections and gross direct tax collections in the April-June quarter is higher than the governments estimates for the entire financial year. The Budget Estimate for indirect tax collections this year is Rs 392,908 crore, an increase of 15 per cent over the last year. In case of direct tax collections, the Budget Estimate is Rs 532,651 crore, 19 per cent higher than 2010-11.
Finance ministry officials said the data, especially for indirect tax collections, was not showing signs of a slowdown in the economic activity. The government would be able to meet its tax mop-up target despite the duty cut on petroleum products, said an official, and added net direct tax collections could even better the target since a major chunk of the refunds for the year had already been given.(Click here for TAX COLLECTIONS)
The revenue department has given refunds to the tune of Rs 46,000 crore in the first three months of the year, against Rs 15,000 crore of refund given in the same quarter a year ago. There has been a moderation in payment of refunds since April when Rs 28,000 crore was given to the taxpayers. In May, the department gave refund of Rs 12,000 crore, which came down to Rs 6,000 crore in June.
The indirect tax collections in the first three months are 19 per cent of the Budget Estimate in 2011-12. This has even bettered the last years collections in April-June which were lower in all three categories customs, excise duties and service tax. However, net direct tax collections as percentage of the Budget Estimate were higher last year mainly due to lower refunds in the first quarter.
Officials said the growth registered in the first quarter would offset the loss of Rs 24,000 crore, the government is expected to face on account of duty cut on petroleum products. Any further increase in crude prices would compensate for the loss due to reduction in excise duty on diesel.
Last month, the government had removed the 5 per cent customs duty on crude oil, brought down the import duty on petrol and diesel from 7.5 per cent to 2.5 per cent, and reduced the excise duty on diesel by Rs 2.6 to Rs 2 a litre to give some relief to oil marketing companies.
The government had registered over 40 per cent and 18 per cent growth in indirect and direct tax collections, respectively, in 2010-11 when economy grew at 8.5 per cent.
The total indirect tax collections for 2010-11 stood at Rs 342,824 crore, exceeding the revised estimate of Rs 334,500 crore. It also achieved the revised direct tax collections target of Rs 446,000 crore.