The slowdown in industrial production has started showing its impact on government's revenues as both Central Excise and Customs duties dropped sharply in October, resulting in 2.5% less collection in indirect tax for the month as compared to the same period last year.

The indirect tax collections in October dropped 2.5% to Rs 30,278 crore as against Rs 31,058 crore in October, 2010, mainly on account of a slowing economy and a cut in Customs and excise duties on petroleum products a few months ago.

Realizations from Customs dropped 11.6% in October to Rs 11,357 crore from Rs 12,849 crore in the year-ago period, said a senior official from the Central Board of Excise and Customs. The central excise collections dropped 5.3% to Rs 10,527 crore from last year's Rs 11,120 crore.

Service tax had a good growth of 18.4%. In October, the collection rose to Rs 8,394 crore from Rs 7,089 crore in October 2010.

However, during the April-October period, the indirect tax collection showed a 17.8% increase to Rs 2.01 lakh crore from Rs 1.70 lakh crore during the corresponding period last year.

The increase during the first seven months of the current fiscal was on account of higher collections in initial months from Customs, excise and service tax that rose by 16.6%, 10.6% and 33.6%, respectively.

To check motor fuel prices, the government had slashed Customs and central excise duties in June to provide a relief to consumers. The cut meant an annual loss of Rs 49,000 crore to the government, including the states' share.