The government's tax kitty will grow bigger in the current fiscal than in 2007-08 despite the duty cuts announced due to slowing down of economy, a top finance ministry official said here on Friday.

"The gross revenue from direct and indirect taxes will increase nominally this year despite the sacrifices (duty cuts) we have made," Revenue Secretary P V Bhide said at the annual session of the Confederation of Indian Industry. However, he expressed concern over the customs duty collection, which is hit by slowdown in economic activity.

"There is a cause of concern on the customs side," he said. Starting from mid-September last year, the government announced a series of cuts in excise and customs duties to stimulate the slackening economy.

The indirect tax collection is hit due to cuts in duties. In fact, the government is estimated to lose around Rs 40,475 crore in indirect taxes during the year because of these measures announced after the Budget for 2008-09.

Bhide further added that the next quarter would be tough in terms of revenue collections.

"We do see a trend, which is little disheartening and possibly suggestive of a tough quarter ahead of us," he said.