Petroleum excise boosts indirect tax collections

While the finance ministry reported a46.2 per cent rise in indirect tax collections in 2014- 15 over the previous year, a careful look suggests that the sharp surge was largely due to an over 100 per cent rise in excise duty collections, fuelled mainly by the increase in rates of petroleum.

Data released by the finance ministry showed that indirect tax collections grew from ₹ 32,661 crore in April last year to ₹ 47,747 in April this year. Central Excise collections increased from ₹ 8,655 crore to ₹ 18,373 crore in the same period, an increase of 112.3 per cent. This represents 8.1 per cent of the amount targeted in the 2015- 16 Union Budget.

This spike in central excise collection has been partly due to the rise in excise duties on petrol and diesel. According to Devendra Pant, chief economist at India Ratings and Research, petrol and diesel account for roughly 26 per cent of the total excise collections, and as excise duties on these items have been increased over the past 7- 8 months, this is showing up in the buoyant excise statistics. In 2012- 13, all petroleum products accounted for roughly 40 per cent of total collection.

said a senior finance ministry official. However, since the excise duty has been converted into cess, the entire revenue generated accures directly to the centre and does not form part of the divisible tax pool that is to be shared with the states.

Part of the rise in collections could also be attributed to the rise in industrial production.

The Index of Industrial Production ( IIP) grew at 2.8 per cent in 2014- 15 as against a fall of 0.1 in 2013- 14.

numbers, increasing from ₹ 11,555 crore in April 2014 to ₹ 14,286 crore in April, 2015.

In line with the strong growth of the services sector, service tax collections were also robust, rising from ₹ 12,451 crore in April 2014 to ₹ 15,088 crore in April 2015, an increase of 21.2 per cent. With the increase in service tax rate from 12 to 14 per cent, as provided for in the 2015 Budget, set to kick in from June, collections are likely to be much higher from that month.

Source: Business Standard; 17 May 2015



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