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Pranab pins hopes on recovery by Q3
September, 09th 2009

Worried over the 28 per cent fall in customs, excise and service tax collections during the first four months of the current financial year, finance minister Pranab Mukherjee is pinning hopes on the revival of the economy in the third quarter to make up the shortfall.

Addressing the annual conference of chief commissioners and directors general of customs and excise, the minister said the government has to be prepared to take all ameliorative measures for the drought-hit parts of the country, "which will also have significant financial implications," he added.

Mukherjee said the negative growth of indirect tax collections in the first four months was a matter of worry and reflected the economic slowdown and consequent stimulus measures.

The government has set a revenue target of about Rs 2,70,000 crore during the current financial year from indirect taxes comprising customs, excise and service tax.

"While we see a gradual thaw in the winter of economic crisis, the situation is still far from normal," the minister admitted.

In order to combat the downturn in the economy, the government has announced a slew of measures, including reduction in indirect taxes, to put more money into the hands of the consumers. But this has led to a decline in the tax kitty.

Mukherjee said the fiscal deficit is presently on the higher side and the government is determined to revert to the path of fiscal consolidation at the earliest. "As we rapidly integrate with the global economy, the role of customs and central excise officers has to be redefined to make them as much facilitators of trade as tax collectors," he pointed out.

While central excise continues to be the bulwark of indirect tax collection, service tax is the new sunrise area for widening the tax base and improving revenue collection, he added.

The role of customs as revenue generator has diminished, but its role in facilitation of international trade continues to grow. "We need to focus on continuous reduction in dwell time and transaction cost for export and import so that the Indian industry gains an extra edge to compete in the world market," the minister said.

Further, it not only has to meet its traditional challenges of combating smuggling and commercial fraud, but has to respond to new challenges in areas as diverse as environment protection, transborder movement of goods having a bearing on national security and international negotiations in multilateral and bilateral fora.

He said the officers at all levels need to be sensitised to the fact that they are facilitators and not just regulators. The tax payers need to be treated with dignity and dealt with in a fair and transparent manner.

He said the key components of 'Sevottam', namely the Citizen's Charter and the public grievances redressal mechanism should be implemented.

It is also important to ensure that the ongoing programmes concerning the use of information technology (IT) and acquisition of modern equipment such as container scanners and baggage scanners at ports and airports are completed as per schedule. These help to detect smuggling in a more non-intrusive and real-time basis and also helps in clearing goods and passengers more quickly, the minister observed.

Mukherjee exhorted the department to play its role in enhancing border security to curb the menace of smuggling, particularly of fake Indian currency notes.

The minister said the contours of administering the new goods and service tax (GST) will be intimated to the department soon and it should be ready to meet the challenges arising out of introduction of GST in 2010.

"While corrupt elements should be dealt with sternly, the process of vigilance enquiry should not itself take the form of punishment. Such inquiries must be disposed of in a time-bound manner," he added.

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