Date:14/02/2007 URL: http://www.thehindubusinessline.com/2007/02/14/stories/2007021403981000.htm

Back Finance Ministry confident of meeting excise duty targets for 2006-07

K.R. Srivats

Despite drop in January collection growth rate

Advertisement

New Delhi Feb. 13 A sharp fall in excise collection growth rate in January this year notwithstanding, the Finance Ministry is hopeful of meeting the budget estimate target of Rs 1,19,000 crore for the current fiscal.

However, indications are that the Finance Ministry may go in for a repeat performance of last budget, when it went in for a downward revision in excise duty collections for 2005-06 at the revised estimate stage.

Faced with lower excise collections, the Government had in budget 2006-07 pegged the revised estimates for 2005-06 at Rs 1,12,000 crore, lower than the budgeted target of Rs 1,21,533 crore for that year.

Official sources highlighted that excise duty collections, unlike customs duty and service tax collections, have been a "mixed bag" this fiscal.

"There have been some months where the growth rate recorded was higher than the asking rate of 6.25 per cent and some months such as January where there was sluggish growth and below the asking rate. But we are hopeful of meeting the budget estimates", sources said.

In January 2007, the Centre's excise duty collections stood at Rs 10,428 crore, reflecting a 3.9 per cent growth over the collection of Rs 10,037 crore in January 2006. Excise duty collections in December 2006 grew 7.8 per cent to Rs 10,292 crore (Rs 9,551 crore).

For April-January 2007, excise duty collections grew 6 per cent to Rs 90,677 crore compared to Rs 85,528 crore in the same period in the previous year.

Asked as to what had led to the sluggishness in excise duty collections in January 2007, official sources said that the commodity-wise details were yet to be compiled at a national level and therefore it would be difficult to come to any conclusion on this front.

PricewaterhouseCoopers' (PwC) indirect tax practice leader, Mr S. Madhavan, told Business Line that growth rate in excise collections could have been impacted due to: (1) disproportionate growth in services sector (2) extension of excise exemption window by three years in certain regions and (3) buoyancy in exports this fiscal.

He highlighted that fast moving consumer goods (FMCG) and pharma industry had ramped up investments in certain excise-free zones in places such as Uttaranchal, Himachal Pradesh, northeast and Jammu and Kashmir during the second half of the current fiscal. This was done after the existing exemption window was widened for three more years from 2007 to 2010.