Centre reports 12% increase in FY21 indirect tax revenue

A spike in customs and central excise revenues, led by auto fuel taxes, boosted the central government’s net FY21 indirect tax revenue by 12% from a year ago to ₹10.7 trillion, finance ministry data released on Tuesday showed.

Of this, ₹5.48 trillion came from goods and services tax (GST), ₹3.91 trillion from central excise and service tax put together, and ₹1.32 trillion from customs duty.

While the government crossed its own original and upwardly revised estimates for both customs duty as well as excise plus service tax, in the case of GST, it improved on the downwardly revised target set two months ago, while missing its pre-pandemic estimate.

The Centre collected ₹1.32 trillion in customs duty receipts in FY21, up 21% from FY20.

The biggest revenue growth was seen in the excise and service tax category, which swelled 59.59% to ₹3.91 trillion in FY21, primarily due to excise collections on items such as petrol and diesel that remain outside GST.

The ministry did not give a break-up of central excise and service tax, but the arrears on account of service tax—a levy that got subsumed into GST—is a small amount. It was in the range of ₹1,400 crore, going by the revised estimates given in Union budget for FY22.

The Union government collected ₹5.48 trillion in FY21 in central GST, integrated GST levied on inter-state sales that is settled between the Centre and states, and GST cess, which is used to compensate states. This shows an 8.5% contraction from what was collected in the year before, but is a 6.4% improvement over the revised estimate of ₹5.15 trillion.

The improvement over the revised estimate also shows the sharp recovery in GST collections.

One factor that contributed to the recovery in GST receipts, especially in the second half of the fiscal, is the recovery in economic activity after the nationwide coronavirus lockdown in the initial months was lifted. The strong anti-evasion drive and the campaign against entities dealing in fake invoices also helped in boosting GST revenue.

This had resulted in the combined GST receipts of the Union and state governments reaching an all-time high of ₹1.24 trillion in March.

The 12% increase in net indirect tax collections comes on the back of this strong recovery in GST collections in the second half of FY21 together with the significant increase in the excise duty collection on petroleum products, said M.S. Mani, senior director at Deloitte India.