FM cites higher tax mop up to dismiss economic slowdown fears

NEW DELHI
9 Jan 2017

Dismissing concerns of slowdown due to demonetisation, Finance Minister Arun Jaitley today said both direct and indirect tax collections have shown robust increase during the April-December period, indicating uptick in economic activity including manufacturing. He said direct tax collection was up 12.01 per cent at Rs 5.53 lakh crore in April-December 2016 as compared to revenue in the year-ago period, while indirect tax receipts soared 25 per cent to Rs 6.30 lakh crore.

Giving the break-up, he said excise collection was up 43 per cent at Rs 2.79 lakh crore, while service tax rose 23.9 per cent to Rs 1.83 lakh crore in the first nine months of the current fiscal. Customs duty receipts were up 4.1 per cent at Rs 1.67 lakh crore.

Indirect tax collection in December was up 14.2 per cent year-on-year, he said. During the month, which witnessed the demonetisation process, the excise collection was up 31.6 per cent, Jaitley said, adding that this category is directly linked to manufacturing.

Service tax receipts in December were also up 12.4 per cent. Customs revenue dipped 6.3 per cent as gold imports came down. "Tax collection data is real and not an estimation," Jaitley said, while dismissing apprehensions of slowdown in following currency squeeze post demonetisation.

When compared with tax collections in November, indirect tax receipts in December 2016 were up 12.8 per cent, he said. "Since there has been a considerable debate in the public space as to the impact of currency squeeze in the months of November and December, the data of these two months becomes relevant," Jaitley said.

VAT collections in most states too have shown an increase and they also received taxes in the old currency in November. "In my opinion, all well administered states have seen rise in VAT collection even in November," he said.

Jaitley said VAT collections in most states have shown an increase and they also received taxes in the old currency in November. "In my opinion, all well administered states have seen rise in VAT collection even in November."

Giving the break-up, he said excise collection was up 43 per cent at Rs 2.79 lakh crore, while service tax rose 23.9 per cent to Rs 1.83 lakh crore in the first nine months of the current fiscal. Customs duty receipts were up 4.1 per cent at Rs 1.67 lakh crore.

Asked about divergence in the GDP number and tax collection figures, Jaitley said: "We will only comment on final figures (of GDP). Today we only have advance estimates presumption. Tax collection data are real it is not a presumption."

The Advance Estimates of GDP released by CSO last week showed economic growth plunged to a 3-year low of 7.1 per cent in 2016-17, from 7.6 per cent last financial year. However, the data does not take into account the impact on industrial activity post demonetisation. "Since there has been a considerable debate in the public space as to the impact of currency squeeze in the months of November and December, the data of these two months becomes relevant," he said. As regards the growth rates for Corporate Income Tax and Personal Income Tax in terms of gross revenue collections, the growth rate under CIT is 10.7 per cent while that under PIT is 21.7 per cent.

However, after adjusting for refunds, the net growth in CIT collections is 4.4 per cent while that in PIT collections is 24.6 per cent. Refunds amounting to Rs 1.26 lakh crore have been issued during April-December 2016, which is 30.5 per cent higher than the refunds issued during the corresponding period last year.

After accounting for the third instalment of advance tax received in December, 2016, the collections under advance tax stand at Rs 2.82 lakh crore, up 14.4 per cent over the year-ago figures. CIT advance tax is growing at 10.6 per cent while PIT advance tax has registered a growth of 38.2 per cent, an official statement said. (PTI)