Indirect tax collections grew by a whopping 43% in the first three months of the current fiscal, providing further testimony to a recovery in industrial activity that prompted International Monetary Fund (IMF) to raise its 2010 growth estimate for the country.

Robust excise collections point towards a healthy industrial output in May, the data for which will be released on Monday, while high Customs mop-up suggest a strong pickup in investments.  The rise in indirect tax collections is on expected lines, said Pronab Sen, former chief statistician of the country. “The numbers are only reflecting the effects of a partial rollback (of stimulus measures) and an extremely low base,” he said.

The effect of lower base a year ago has contributed substantially to the increase in collections. Indirect tax mop-up had contracted 30% in the first quarter of 2009-10.The revenue from Customs, excise and service tax, which make up the indirect taxes, was Rs 56,930 crore in the April-June quarter, up from Rs 39,694 crore in the year-ago period. These numbers could be revised upwards later as more details become available, said an official of Central Board of Excise and Customs.

Realisation from Customs increased by 60% to Rs 28,135 crore indicating that the industrial recovery was backed by investments. “The growth in imports points at a pick up in corporate expenditure on machinery,” said a finance ministry official.

Rising prices of crude oil in the international market and an increase in import duty on crude to 5% also contributed to higher realisation from Customs.

Excise duty, or the tax levied on goods at the factory gate, collections rose by 55% to Rs 19,536 crore. Service tax collections, however, declined by 3% to Rs 9,258 crore during the quarter, partly because service tax rates were not increased in the budget. Currently, services are taxed at 10%.

Earlier, data released on Wednesday showed direct tax collections also grew by a strong 15% in the first quarter.

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