Increase in exchequer from import duty receipts

Excise duty is the only laggard in the Centre’s tax revenue collection so far this year, which has declined from the year-ago level. The dramatic improvement in customs receipts comes as a relief to policymakers trying to balance the budget amid a rise in subsidy expenditure.

center collected 86,200 crore in customs duty in the first half of the current fiscal, about 7% less than what was collected in the same period a year ago. Customs collections started picking up in September itself and in the three months to November, the trend reversed. At the end of November, customs receipts stood 1.41 trillion, a jump of over 12% from the year-ago period, data from the Controller General of Accounts (CGA) showed.

India’s merchandise imports between April and November rose nearly 30 per cent to $493.61 billion as against $381.17 billion during the same period last year, commerce ministry data showed.

Abhishek Jain, Partner, Indirect Taxes, said, “Improvement in import volumes and firmer prices in global markets for several items in India’s import basket could be the reason for buoyancy in dollar value of imports and improvement in customs duty collections. ” KPMG.

Experts said that since there has been no major revision in duty or legislative changes recently, the jump in customs duty collection could be due to increase in cross-border trade, including in volume.

“India’s exports are import-intensive. DK Srivastava, chief policy advisor at EY India, said a rise in import volumes could point to a rise in economic activity and many of these inputs could be for local manufacturing.

In April-October, India’s factory output grew by 5% from a year earlier, according to data from the National Statistics Office. Private surveys also reflect positive sentiments in the domestic manufacturing sector. According to S&P Global, the seasonally adjusted India Manufacturing Purchasing Managers’ Index (PMI) at 57.8 in December, up from 55.7 in November, points to a strong recovery in the health of the sector which is the best seen since October 2020 went.

The CGA data also shows that the Centre’s gross tax receipts grew by 16% 17.8 trillion in April-November, driven by an increase in direct and indirect taxes. Center’s gross tax revenue at the end of the current fiscal may almost exceed the budget estimates, experts said. 3.5-4 trillion, helping it comfortably meet the additional subsidy requirement and meet its fiscal deficit target of 6.4% of GDP this year. This is also expected to help the Center announce the fiscal consolidation road map in the FY24 Union Budget to be presented on February 1.

India’s import growth between April and November this fiscal year was driven by commodities such as silver, coal, fertilizers and petroleum. While cotton imports increased by 259% during this period amid a global cotton shortage, silver, coal and fertilizer imports increased by 179%, 97% and 62%, respectively. Meanwhile, petroleum (crude and products), the largest imported item by value, also grew 52% during the period as India’s energy requirement bounced back after the Covid-19 induced lockdown.