Customs duty and Excise duty stimulate Indirect tax rise in COVID-hit year.
Net Indirect Tax increased by 12.3% in FY21 to ₹10.71 lakh crores as a result of a jump in the excise revenue. On Tuesday, provisional data from the Finance Ministry showed that the Net Indirect Tax count surpassed the Centre’s recently revised approximations.
The Goods and Services Tax collections for the full year in FY20 fell by 8% from ₹5.99 lakh crores to ₹5.48 lakh crore, but the overall kitty was boosted by a sharp spike in excise collections.
The Finance Ministry said in a statement, “Net tax collections on account of Central Excise and Service Tax (Arrears) during financial year 2020-21 stood at ₹3.91 lakh crore as compared to ₹2.45 lakh crore in the previous financial year, thereby registering a growth of more than 59%”. Customs duty collections also grew by 21% to ₹1.32 lakh crore, thereby leading to increase in the exchequer’s reserves.
Saket Patwari, Executive Director at Financial Consultancy, Nexdigm, said, “The 59% growth in net central excise and service tax (arrears) collections is largely on account of the Sabka Vishwas scheme for resolving legacy disputes”. He added, “In addition, there has been a rise in customs duty collection”. Provisional data showed last week that Net Direct Tax collections for the pandemic-hit FY21 grew almost 5% to ₹9.45 lakh crore.
The Finance Ministry further said, “GST collections were severely affected in the first half of the financial year on account of COVID”. It added, “However, in the second half, GST collections registered a good growth and collections exceeded ₹1 lakh crore in each of the last six months".