The Central government’s receipts from excise, customs and service tax grew by just 6.7% in the April-December period of the current fiscal, against a full-year estimate of 20% as muted manufacturing activities heavily impacted collections and service tax receipts started showing signs of contraction.

The tax department collected R3.7 lakh crore by way of indirect taxes in the first three quarters. In the month of December, the growth rate was 5.1%. The dismal growth rate indicates the department is set to miss the indirect tax collection target of R6.2 lakh crore for this fiscal.

On the direct tax side, the revenue department has managed in the April-September period to achieve close to the 15.7% growth projected for the full year.

Excise duty collections, which have adversely affected the overall indirect tax receipts, however, have started showing positive signs in December. In the April-December period, excise duty collections managed to recover from the trend of contraction and posted a 1.6% growth as manufacturing activities showed a rebound from a 7.6% contraction in October to post a 3% growth in November. Manufacturing sector had contracted 2.6% in November 2013.

In the same period, collections from customs duty grew at 9.7% to R1.3 lakh crore.

Service tax collections, which have been the fastest growing indirect tax among the three levies, have in December plunged into negative territory for the first time. Collections shrank 5.2% in December in sharp contrast to the double digit growth showed in the initial months of the fiscal. In the first three quarters, service tax growth thus averaged 8.7% to R1.1 lakh crore.