Q1s Indirect Tax Collections Jump in India

August 10, 2011 Taxation in India

Indirect Tax Collections in IndiaIndirect tax collections in India have been on the rise this fiscal year, and the Central Board of Excise and Customs is taking the growth as an indicator of an upcoming boom in economic activity in the country.

The latest analysis of the current fiscal year’s tax collections released by the Central Board of Excise and Customs on August 9th, indicated that the country’s economy is set to see a strong pick up in the coming months, as indirect tax collections underwent a 27 percent increase over the months between April and July when compared to the same period last year.

A significant portion of the indirect tax collections increases were attributed to a 54.7 percent jump in service tax collections over the month of May. Dutt Majumdar said that the country cannot expect to see that level of growth in collection of service taxes for the rest of the year, but indicated that collections increases of up to 35 percent per month were still likely.

The Chairman of Central Board of Excise and Custom Dutt Majumdar said that indirect tax collections have grown despite the fact that in June the government reduced customs duties on crude oil and petroleum products to zero percent, and slashed excise duties on diesel to INR 2.6 per liter. He explained that the Central Board of Excise and Custom is optimistic for the potentially significant growth prospects of the economy if excise duties saw such an increase despite the tax rate reductions.

Photo by Cajie