Indirect tax collections rose 4.9% in July and 3.9% in April-July, indicating that targets for the full fiscal may be difficult.

The government budgeted Rs 6.23 lakh crore from indirect taxes of customs, central excise and service tax in FY15, a near 25% rise from last year. Indirect tax collections in the first four months add up to 24.8% of the total budgeted for the year. Steep revenue target is seen by experts as the biggest risk to achieving fiscal deficit target of 4.1% of GDP this year. In July alone, indirect taxes were up 4.9%, a moderation from 13.5% in June.

Growth in indirect taxes has been muted because of low economic activity, but there are signs of recovery taking shape. Industrial production rose 3.9% in Q1 and non-oil imports growth turned positive, which should push up customs collections.

Service tax collections were up 16.4% in the first four months, nearly half the 30% growth budgeted for the fiscal.

In the first three months, a fiscal deficit of 48.4% of that budgeted for the year has run up, but market borrowing for the first half was pruned because of good cash position. RBI transferred over Rs 52,000 crore surplus to the government, which should boost its non-tax revenues.

Source:- economictimes.indiatimes.com