Higher tax collection show no impact of note ban: Jaitley
India’s indirect tax receipts grew by an annual 14.2% in December, finance minister Arun Jaitley said on Monday, adding that the robust figures suggested the government’s cash crackdown had little impact on overall economic activity.Updated: Jan 09, 2017 20:05 IST
India’s indirect tax receipts grew by 14.2% in December as compared to the same period last year, finance minister Arun Jaitley said on Monday, adding that the robust figures suggested the government’s currency recall didn’t hurt economic activity. Direct tax data also showed a growth, of 12.01%.
Indirect tax collection is the measure of a country’s economic activity in a country and comprises levies such as central excise, service tax and customs duty.
The central excise collection showed the highest upward spike at 31.6% in December 2016 over the same period last year. Central excise shows a 43% growth in the April-December period compared to the same time in 2015.
Service tax grew at 23.9% between April-December and 12.4% in the last month 2016.
Customs collection showed an annual growth of 4.1% but between for December of 2016 it contracted by 6.3% when compared to the same period in 2015.
“The tax collection data is real and not an estimation,” said Jaitley, rubbishing fears of economic contraction after the currency squeeze.
On November 8, Prime Minister Narendra Modi scrapped 500-and 1,000-rupee banknotes as part of a crackdown on tax dodgers and counterfeiters, leaving companies, farmers and households all in pain.
Since then, the Reserve Bank of India and the government have pared back growth estimates, bolstering opposition parties who say demonetisation has hurt the economy and snuffed out thousands of jobs in rural areas.
But Jaitley beat back the criticism, saying that indirect tax collection in December grew by 12.8% as compared to November.
The finance minister also hit back at states who have shown contraction in VAT collection to drive home the ills of note ban. “Apart from mismanaged states, others have shown a growth in their collections,” said Jaitley.
But economists question whether these positive tax figures will be reflected in the revised GDP numbers, to be released at the end of next month. Former chief statistician of India, Pronab Sen said: “The CSO had incomplete data from November and correctly did not include such volatile numbers for GDP estimates. But data from post-demonetisation months will be part of the final GDP numbers that will be released in February, and that is bound to have an impact on the numbers”.
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First Published: Jan 09, 2017 12:56 IST