Centre sees 45% fall in customs collection in FY18
City: 

With countervailing duty and special additional duty of customs merging with the Goods and Services Tax (GST), the Centre’s revised estimate for collection on account of customs for the current fiscal has been pegged at Rs 1.35 lakh crore, nearly 45 per cent down from the budget estimate for FY18.

The government had estimated to collect Rs 2.45 lakh crore from customs, the duty levied on export and import of various goods, in the current financial year.

The increase in custom duty in budget 2018 would, however, make up for part of the custom revenue loss.

Proposing a raise in custom duty on imports of dozens of items, finance minister Arun Jaitley had said that the move will incentivise the domestic value addition and Make in India in various sectors.

Some of the items that saw increase in custom duty are mobile phones, some of their accessories, TV parts, smart watches and footwear.

“Custom duty is now limited to only basic custom duty. Till June 30 (2017) it had three components –basic custom duty, countervailing duty and additional special duty. Now only the basic custom duty is levied and the other two components have gone into GST, the revised estimate is considerably lower,” said Pratik Jain, partner & leader, indirect tax, PwC India.

As GST is yet to stabilise, the government seems cautious in protecting its revenue and has therefore proposed a 10 per cent long-term capital gains tax (LCGT) on transfer of shares.

Along with other tax proposals like raising health and education cess to 4 per cent on personal and corporate income the government is set to mobilize additional revenue.

The hike in cess will add Rs 11,000 crore to the public exchequer in FY19. The government has budgeted direct tax mop-up at Rs 11.5 lakh crore, an increase of 14.7 per cent from the revised estimates of FY18.

The indirect tax revenue is budgeted at Rs 11.2 lakh crore, showing an increase of 19.2 per cent from the revised estimates of FY18.

While public finance experts hope the government to meet its direct tax collection target, they have found the indirect tax collection slightly ambitious.

“While the government’s direct tax collection target appears achievable, the indirect tax growth assumption of 19.1 per cent over an 8.7 per cent growth in fiscal 2018 seems a tad ambitious,” research and rating firm CRSIL said last week in its report.

The revenue target for the GST has been set at Rs 7.4 lakh crore in FY19, higher by 25 per cent compared to FY18 after adjusting for the late GST roll out.

“We believe that FY19 GST numbers are over ambitious or the government is expecting more compliance and hence better collection in FY19,” according to an SBI analysis.

Columnist: 
Nirbhay Kumar