Amid declining industrial output, Central Board of Excise and Customs (CBEC) Chairman Sumit Dutt Majumder today said it would be difficult for the department to maintain 23.9% growth in indirect taxes achieved in the first five months of the current fiscal.
Led by robust service tax mop-up, the indirect tax collection in the April-August period rose 23.9% to Rs 1,57,725 crore. This has been achieved despite a cut in duties on petroleum products in June.
"(I) don't expect this growth to be maintained. These are exceptional figures coming out of the new Point of Taxation (PoT) rule. I do expect growth in the coming months but not at this level," Majumder told PTI.
He further said that both "customs and central excise growth have shown good increase despite cut in petroleum products. Manufacturing has been doing quite well, contrary to what is being said," he added.
The growth momentum, however, may be difficult to maintain in view of the slowdown reflected in the dip in industrial output to 21-month low of 3.3% in July.
The government had in June removed 5% customs duty on petroleum crude, brought down the import duty on petrol and diesel from 7.5% to 2.5%, and on other petroleum products to 5% from 10%. It also abolished the Rs 2.6 per litre basic excise duty levied on diesel, sacrificing annual revenue of Rs 49,000 crore.
The biggest contributor to the indirect tax was the services sector, which registered a hefty increase of 37.8% in the first five months of the current fiscal, at Rs 34,772 crore as against Rs 25,238 crore in the corresponding period of 2010.
"In this financial year, we have been giving a lot of importance to improve service tax collections through better awareness and compliance. For instance, we found there were about 15 lakh registrants but returns were filed only by 6 lacks. We are trying to locate them and find out whether they have really stopped providing service or there is (tax) evasion," Majumder said.
The very fact that the Central Board of Excise and Customs started identifying 9 lakh stop-filers has ensured better compliance, he said, adding that "we also started a public awareness campaign to tell people that filing returns is your duty and if you don't pay what are implications".
Incidentally, customs duty collection expanded 22.1% to Rs 63,327 crore' central excise by 18.7% to Rs 59,626 crore during the first five months of the current fiscal.
In August, customs and central excise grew by 13.4% and 19.7% respectively, whereas services expanded 57.3%, amid growing fears of a slowdown in the economy.
The overall growth in customs, central excise and service tax stood at 24% in August at Rs 30,366 crore.