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Finance Minister Arun Jaitley asked the revenue department on Wednesday why there was a fall in tax collection from the target in 2013-14.
The department attributed the shortfall to the economy's slowing and a dip in imports.
On Tuesday, Jaitley had asked the department of economic affairs (DEA) if there was a rollover of subsidies, as reported in media. He was told this happens yearly; fourth quarter liabilities are passed on to the next financial year.
Officials said the government would consider measures to revive manufacturing and growth, without which tax collections would not pick up. "Given that the economy had slowed, the (FY14) tax target was high," said an official.
The government had estimated a gross revenue collection of Rs 12,35,870 crore in Budget 2013-14 but lowered it to Rs 11,58,905 crore in the revised estimates. Collection was about Rs 12,000 crore short in 2013-14, as indirect taxes missed the revised estimate by Rs 17,000 crore; direct tax collection was Rs 5,000 crore more.
Officials told Jaitley excise collection fell because of a contraction in industrial production. The Index of Industrial Production declined 0.1 per cent in 2013-14. Besides, they said, Customs collection was affected by shrinking imports. Imports fell eight per cent to $450.9 billion over the year from $490.7 bn in 2012-13.
Officials also told Jaitley the rise in import duty on gold had led to increased smuggling. The World Gold Council estimates suggest 200 tonnes of gold were smuggled into India in 2013.
Revenue Secretary Rajiv Takru, in a presentation, apprised Jaitley of problems and challenges on the revenue front. For 2013-14, the government had estimated the direct tax collection would increase 18 per cent to Rs 7.58 lakh crore. The actual collection was Rs 6.41 lakh crore. Indirect tax collection was likewise projected to grow 21 per cent to Rs 6.17 lakh crore. Actual collection was Rs 5.07 lakh crore.
In the current financial year (starting April 1), direct tax collection declined 21.5 per cent to Rs 9,590 crore in April 2014 from Rs 12,214 crore in April 2013. Indirect tax collection, on the other hand, grew 3.3 per cent to Rs 33,684 crore in April 2014 from the same month the previous year.
The revenue and economic affairs departments appear to be Jaitley's focus. Thursday will be the new minister's third meeting with the revenue department. The first one, on Tuesday, was for discussing the creation of a special investigation team on unaccounted money.
Jaitley was scheduled to meet officials from the department of financial services on Wednesday morning but called a meeting of the revenue department instead. He met officials from DEA once on Tuesday and was scheduled to meet again on Wednesday. The expenditure department had a meeting with the new minister late on Tuesday.
