Finance Minister Pranab Mukherjee today said it would not be easy to realise the Rs 3,92,908-crore target in indirect tax collections this year, because the economic growth was likely to slip to 8.75 per cent, against the Budget estimate of nine per cent.
Indicating that the government’s fiscal deficit target could come under pressure, the Central Board of Excise & Customs (CBEC) echoed similar views and said the situation needed to be reviewed in the coming months.
“For realising the revenue target of Rs 3,92,908 crore for 2011-12, you would need a growth of nearly 15 per cent. The task before you is very challenging and will require sustained and strategic efforts throughout the financial year,” Mukherjee said at the annual conference of chief commissioners and director generals of CBEC.
The finance minister said the economy might not be able to achieve the nine per cent growth projected in the Budget, but with “hard work” it would surely be possible to grow at 8.75 per cent with a variation of 0.25 per cent. He, however, did not completely rule out the possiblity of striking a nine per cent growth.
The government is aiming at reducing its fiscal deficit to 4.6 per cent of the GDP in FY12. The global economic situation, rise in crude oil prices and high inflation, however, are posing a risk to this target.
Revenue Secretary Sunil Mitra said meeting the tax target would not be an easy task. He said the impact of increased base effect would only compound the problem.
Indirect tax collections in 2011-12 stood at Rs 3,42,824 crore exceeding the revised estimate of Rs 3,34,500 crore by around Rs.9,000 crore — a growth of 40.5 per cent over the year-ago period.
“The current financial year will be a challenge. Rs 3,92,908 crore will be a difficult target because of the base effect,” CBEC Chairman S Dutt Majumder said.
Mukherjee also expressed concerns over high revenue arrears and avoidable litigation with taxpayers which has been growing over the years. Revenue arrears stand at Rs 35,000 crore and have grown consistently over the years from Rs 9,000 cror in March 2005.
“You must jointly devise a strategy for realisation and liquidation of at least 50 per cent of this locked up revenue during the current fiscal. This would also provide the necessary fillip to your efforts in attaining the budgeted revenue targets for 2011-12.”
In the last five years, the number of litigations before the Supreme Court has grown by close to 25 per cent, the high court by over 65 per cent, at CESTAT by around 49 per cent and before the Commissioner (Appeals) by over 58 per cent. The growth in adjudication pendency between 2007 and 2011 in central excise is around 44 per cent, while in customs, it is around 74 per cent.
