Excise mop-up may take a hit

Rs 3,000-4,000 crore shortfall in collections if sale of diesel and petrol continues to be low.

The revenue department is likely to face a shortfall of Rs 3,000-4,000 crore in excise duty collections, if the sale of diesel and petrol continued to be low in the remaining part of the fiscal year.

"Excise collection is an area of concern, even though there has been a slight increase in the last two months. The impact of oil companies not paying advance tax and lower excise duty may also have a substantial impact. The volumes have not been growing for both diesel and petrol. It was negative earlier this year. If the low volumes continue, we can expect Rs 3,000-4,000 crore loss in revenue," Revenue Secretary, KM Chandrasekhar said.

Speaking on the sidelines of a CII seminar on international trade he said the government was likely to mop-up around Rs 3,000 crore of fringe benefit tax. This, he said, was because the FBT proceeds came into the government kitty effectively from only July this year.

Asked if the budget estimates in direct and indirect tax collections would be met he said, "with six months still to go, it is difficult to make that assessment confidently. Last year, our collections started to dip after December and we had to revise our targets".

Chandrasekhar admitted that personal income tax collections was still below target and was mainly because of higher exemptions and the changes made in tax slabs in the Budget. "However, even income tax collections have started picking up in August and September," he said.

He said the revenue department was working closely both with the Institute of Chartered Accountants and cost accountants to strengthen and make excise payments audits more effective.

He also said there was a need to ensure that there were no distortions through tax breaks. "That is not to say that certain sectors should not be directed through tax breaks and subsidies, but such breaks must not cause distortions," he said.