Finance Minister P Chidambaram has called a meeting of top tax officers later this month amid a slowdown in industrial growth and, hence, sluggish imports impacting revenues, particularly on customs duty front in the first four months of 2012-13.
The meeting with chief commissioners and director generals of income tax, central excise, customs and service tax comes within one month of Chidambaram taking charge of the finance ministry.
It is learnt that in one of his meetings, with the senior officials of the Central Board of Excise & Customs (CBEC) and the Central Board of Direct Taxes (CBDT), he had expressed concern over slower growth in tax collections, especially from customs duty.
While Chidambarams predecessor, Pranab Mukherjee had already addressed the annual conference of chief commissioners and directors general in June this year, officials said the new finance minister wanted to get familiarised with his officers.
They said he was likely to review the performance of the tax officers in the current financial year so far and deliberate upon other issues affecting collections.
This will be the finance ministers first meeting with chief commissioners after taking charge. He would like to know who is doing what. It will be a kind of a review meeting, said a finance ministry official.
Chidambaram had asked all the departments in the finance ministry to prepare an action plan on how they would go about tackling issues in their respective areas. On the tax front he had stressed the need to bring clarity in laws and improve collections by plugging leakages, recovering arrears and minimising tax disputes. Indirect tax collections during the first four months of 2012-13 increased 14.5 per cent to Rs 1.25 lakh crore, against Rs 1.09 lakh crore in the year ago period.
Indirect tax collections in April-July 2012 are less than 25 per cent of the Budget estimate of Rs 5.05 lakh crore for entire 2012-13, which represents an increase of about 27 per cent over last years collections.
Collections under this head were pulled mainly by customs duty, even as service tax made the exchequer richer. Excise duty rose but not to the extent targeted by the Budget.
Service tax collections increased by almost 40 per cent to Rs 30,917 crore in April-July 2012 this year, while excise duty mop-up went up by 18.4 per cent to Rs 42,934 crore. The Budget has pegged excise duty to be up by close to 29 per cent and service tax collections to be higher by close to 30 per cent in 2012-13 year-on-year.
Both service tax and excise duty were raised two percentage points to 12 per cent in the Budget for 2012-13.
Customs duty collections were up merely 0.8 per cent at Rs 51,173 crore as imports contracted 6.47 per cent during the period. Contraction in imports signified fall in industrial growth. Industrial production fell 0.1 per cent in the first quarter of this fiscal.
Direct tax collections, net of refunds, increased 34 per cent to Rs 1.05 lakh crore in April-July 2012 against Rs 78,679 crore in the same period last year. This was mainly on account of much lower refunds than the year ago period. However, on gross basis the collections merely rose by 4.68 per cent to Rs 1.39 lakh crore.
During April-July period, direct tax collections, exclusive of refunds, are about 18 per cent of this years Budget estimate of Rs 5.7 lakh crore.
The target represents an increase of about 25 per cent over the last years actual collections.