The finance ministry said on Wednesday that customs duty collections at about Rs 18,000 crore (Rs 180 billion) in the first quarter of this fiscal and initial reports on steel and cement sectors point to a recovery in industry that would also benefit from tax cuts announced as part of stimulus packages.
Customs collections are six per cent higher during April-June this year over the previous quarter, mainly on account of higher imports of raw materials and capital goods, Central Board of Excise and Customs chairman P C Jha told PTI.
"Our customs collections for the first quarter of (the) current fiscal are at Rs 17,858 crore (Rs 178.58 billion). In the January-March period, the collections were at Rs 16,766 crore (Rs 167.66 billion)," he said.
Stating that collections are higher on account of improved imports of raw materials and capital goods, he said, this certainly would lead to improvement in manufacturing sector, though the results would be seen 2-3 months later.
"This is a signal that the manufacturing sector will also improve. In imports, major components are raw materials and capital goods that means in future, (the) manufacturing sector will improve," he said.
Tax cuts in three stimulus packages announced since December last year had a consequential effect of Rs 52,000 crore (Rs 520 billion), Jha said.
"Last year 14 per cent excise continued till December. This year eight per cent duty is from the beginning... even at this rate the collection will be higher," he said.
Under the packages excise duty was cut by six per cent and service tax by two per cent to spur the economy.
Jha said there are early reports of improvement in steel and cement sector. "Positive (impact) will take some time," he stated when asked about excise collections.
On Tuesday, finance minister Pranab Mukherjee [ Images ] had said production of major steel producers like Tata Steel [ Get Quote ], SAIL [ Get Quote ] and RINL registered a 13 per cent growth in June, 2009 on year-on year basis.
Cement production increased by 13.1 per cent in June, year-on-year, the finance minister had said.
On excise duty collection for the first quarter of the current fiscal, he said, it was a bit early and figures had not yet been computed.
After turning negative at Rs 78 crore (Rs 780 million) in April, net excise duty collections stood at Rs 5,780 crore (Rs 57.8 billion) in May this fiscal, according to figures released by controller general of accounts.
Asked if the government had not pegged lower its targets for indirect taxes given the fact that worst is behind, Jha said, "No I don't think so."
As per the Budget proposals, the excise collections for the current year are targeted at Rs 1,06,477 crore (Rs 1,064.77 billion), customs at Rs 98,000 crore (Rs 980 billion)and service tax revenue at Rs 65,000 crore (Rs 650 billion), thus totaling the indirect tax revenue to Rs 2,69,477 crore (Rs 2,694.77 billion).
In the Budget 2008-09, the government had fixed a target of Rs 3,21,064 crore (Rs 3,210.64 billion) for indirect taxes, but later revised it to Rs 2,81,359 crore (Rs 2,813.59 billion).