Indirect tax collections up 37.5% in April-June

Indirect tax collections of the central government increased by 37.5 per cent in the first quarter of current financial year, helped in large part by higher excise duty on petrol and diesel and gold and a hike in service tax rate.

But, according to the government's chief economic advisor Arvind Subramanian, this reflected a healthy growth in the economy.

Indirect tax comprises custom duty (levied on export and import of the goods), central excise duty (levied on domestic manufacturing) and service tax (levied on various services).

Finance ministry estimates show indirect tax collection in the first two months of the current financial year increased to Rs154,000 crore compared to Rs112,000 crore during the corresponding period of the previous fiscal. This shows an increase of 37.4 per cent.

"In April-June over the comparable period last year, indirect tax revenue grew a robust 37.5 per cent," he said, but gave no details about the actual collection.

Subramanian attributed the buoyancy in indirect tax collections partly to an increase in excise duty on diesel and petrol and gold, besides a hike in service tax rate from 1 June.

Excluding these new levies, indirect tax collections (which include excise, customs and service taxes) grew 14.5 per cent in the first quarter from a year ago.

"Given that GDP growth is the tax base, what it suggests is that the underlying nominal GDP growth is growing at a healthy pace," he said.

However, the growth in revenue collection was not reflected in manufacturing output, with the index of industrial production (IIP) data released on Friday showing that the growth in industrial production fell below the 3 per cent level in the first two months of the fiscal, against 4.6 per cent in April-May of 2014-15.