The Centre’s indirect tax exchequer surged by more than 12 percent to Rs 10.71 trillion in 2020-21 (FY 21) in comparison to Rs 9.54 trillion in the previous year although Goods and Services Tax (GST) exchequer lessened by 8 percent. The Think Tank of the industry attributed the increase in indirect tax revenue to “shoot up in custom duties and petrol & diesel prices” in addition to recovery in consumption during the second half.
In all, despite a 10 percent decrease indirect tax exchequer, overall tax collection increased by a mild amount to Rs 20.16 trillion in FY21 that is slightly more than Rs 20.05-trillion mop-up in the FY20 due to rise in indirect taxes i.e. customs and prices of petrol and diesel.
Indirect Tax Constitutes:
- Goods and Services Tax
- Excise Duty
- Customs
Customs duty collection rose by 21 percent to Rs1.32 trillion during FY21. Additionally, the collection from Central excise duty and service tax (arrears) were up by greater than 58 percent to Rs 3.91 trillion during 2020-21.
“The healthy expansion in indirect taxes during the pandemic benefited from the higher incidence of taxes and cesses on petroleum products as well as the recovery in consumption in the second half of the year,” said Aditi Nayar, principal economist at ICRA.
However, The Ministry of Financed did not provide a further break-up, but in totality, all the taxes on petroleum products contributed Rs 2.63 trillion to the Centre in the first nine months of 2020-21 that is nearly 92 percent of Rs 2.87 trillion that the aforesaid ministry received in the entire FY20, as per figures provided on the Petroleum Planning and Analysis Cell website.
Coming to Merchandise imports to India during 2020-21, it declined 18 percent to $388.92 billion during 2020-21, but overall custom duty collection augmented by 21 percent. The reason attributed to the aforesaid mechanism is the hike in customs duty on items such as Optical fibers, CCTV cameras, automobiles, and their parts.
However, the Centre’s collection from GST (CGST, IGST, and compensation cess) during FY21 was lower by 8 percent to Rs 5.48 trillion as compared to Rs 5.99 trillion in the previous year.
“There has been a rise in customs duty collection, contributing to an increase in indirect tax collection for the year,” said a tax expert.
As per another tax expert, collection from indirect tax 
These types of taxes paid on Consumption by the consumer but they do not pay directly to the government (unlike income tax). For example, GST, Sales Tax, VAT, Custom Duty and Octroi Tax is signaling that the economy is up on the growth trajectory.
