Finance minister P Chidambaram has said that India's excise duty receipts have not kept pace with strong growth in the manufacturing sector and urged business houses to help improve collections.

Speaking at the inauguration of the new electronic accounting facility for excise and service tax, (See: Excise duty, service tax payment systems to go online) he noted that if the economy was growing by 8.5-9 per cent per annum with the manufacturing sector showing double-digit growth, excise too should grow at the same rate.

While receipts from corporate tax, service tax and customs showed robust growth during April-January 2006-07, excise collections have been prevailing at around 7.8 per cent and said excise duty could fall short of the targeted Rs1.19 trillion ($26.74 billion) for 2006-07.

"I am inclined to believe that there is sizeable evasion in excise, he said an added, "evading does not pay in the long run," he said. "I would urge industry to pay excise just as they pay corporate and service taxes."

The tax recipt target for 2007-08 has been pegged at 17 per cent to help reduce the fiscal deficit to 3.3 per cent of GDP, down from 3.7 per cent in 2006-07. Tax collections were up by 36 per cent at Rs2.56 trillion during the first 10 months of 2006-07.

Corporate tax receipts grew by 50 pe cent, customs duty 33.5 per cent and income tax by 28 per cent.