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Jaitley dismisses concerns of economic slowdown over demonetization, cites higher tax collections

Dismissing concerns of slowdown due to demonetization, Finance Minister Arun Jaitley on Monday said both direct and indirect tax collections have shown robust increase during the April-December period, indicating uptick in economic activity including manufacturing.

He said direct tax collection was up 12.01% at Rs 5.53 lakh crore in April-December 2016 as compared to revenue in the year-ago period, while indirect tax receipts soared 25% to Rs 6.30 lakh crore. Giving the break-up, he said excise collection was up 43% at Rs 2.79 lakh crore, while service tax rose 23.9% to Rs 1.83 lakh crore in the first nine months of the current fiscal. Customs duty receipts were up 4.1% at Rs 1.67 lakh crore. Indirect tax collection in December was up 14.2% year-on-year, he said.

During the month, which witnessed the demonetization process, the excise collection was up 31.6%, Jaitley said, adding that this category is directly linked to manufacturing. Service tax receipts in December were also up 12.4%. Customs revenue dipped 6.3% as gold imports came down. “Tax collection data is real and not an estimation,” Jaitley said, while dismissing apprehensions of slowdown in following currency squeeze post demonetization. When compared with tax collections in November, indirect tax receipts in December 2016 were up 12.8%, he said.

“Since there has been a considerable debate in the public space as to the impact of currency squeeze in the months of November and December, the data of these two months becomes relevant,” Jaitley said. VAT collections in most states too have shown an increase and they also received taxes in the old currency in November. “In my opinion, all well administered states have seen rise in VAT collection even in November,” he said.