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‘High indirect tax mop-up reflects economic revival’

The growth in the revenue mop up is also marked by increase in service tax rate which will contribute an additional Rs 20,000 crore to the kitty.

By: ENS Economic Bureau | New Delhi | Published: August 13, 2015 2:03:51 am

The robust growth in the indirect tax collection has brought some relief to the exchequer reeling under the not-so-impressive industrial production numbers. While this may reflect the high additional revenue mobilisation (ARM) measures taken in the Budget, the government has argued that it indicates underlying improvement in the economy.

“These (indirect tax) collections indicate that the underlying momentum in the economy continues to improve across all sectors …(and suggests) healthy increase in nominal GDP growth,” chief economic advisor Arvind Subramanian told reporters here on Wednesday.

The indirect tax revenue jumped over 37 per cent to over Rs 2.1 lakh crore in the four month period account of higher excise duty collections due to increase in excise duty on petroleum, withdrawal of stimulus package from capital goods and consumer durables and motor vehicles with effect from December 2014 and increase in duty rate. However, the CEA said, even after discounting the impact of ARM measures, the indirect taxes collection was up 14.6 per cent.

However, finance ministry officials said that while the growth can’t be denied, during the first half of fiscal, the department tries to garner 45 per cent of the BE. “This has always been the case barring 2013-14 when even the RE could not be met due to poor economic scenario. We target to achieve 7-8 per cent per month while 12 per cent of BE in March,” the official added. In April-July, the excise collections jumped 75.4 per cent to Rs 83,454 crore. While revenues from service tax rose 20.1 per cent to Rs 60,925 crore, those from Customs surged 21 per cent to Rs 66,076 crore.

The growth in the revenue mop up is also marked by increase in service tax rate which will contribute an additional Rs 20,000 crore to the kitty. “It also includes customs collections, which have also been helped by rupee depreciation of 6 per cent between April and July,” Subramanian added.

“Stripped of all additional revenue measures, indirect tax collections increased by 15.2 per cent in July 2015 over July 2014, and by 14.6 per cent for April-July 2015 compared to April-July 2014,” he added.

 

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