The Centre’s revenue from excise, customs duty and service tax grew an impressive 37.6 per cent in April-July this year to Rs 2.1 lakh crore, reflecting an uptick in consumption in certain sectors besides the increase in collection from hikes in tax rates, and withdrawal of a stimulus to consumer goods and automobiles.
Service tax was hiked to 14 per cent from 12.36 per cent effective June this year while the excise duty was increased marginally to 12.5 per cent from 12.36 per cent in the Budget.
These and the withdrawal of stimulus (concessional tax rates) to automobiles and consumer goods contributed to the surge in indirect tax collections. In the case of service tax, for instance, the growth in collections in April-July would have been nearly half the actual growth reported of 20.1 per cent if the rate hike hadn’t occurred, analysts said.
Indirect tax receipts growth of 39.1 per cent seen in July is better than the 33.3 per cent recorded in June, but below the 46.2 per cent recorded in April.
According to experts, consumption in sectors like automobiles — car sales recorded a 17.47 per cent growth in July — is expected to sustain the trend in tax revenue, although the low fuel prices would have a negative impact on collections. The government has set a target of collecting Rs 6.46 lakh crore from excise, customs and service tax this year, an 18.8 per cent growth from last year’s receipts. FE