Facing a likely shortfall of over Rs 35,000 crore in indirect tax collections, and the dismal state of revenue collection so far, the finance ministry is considering several measures to shore up the kitty base, including raising tariff rates in both customs and excise for a few items which are below the peak duty rate.

The Central Board of Excise and Customs is already analysing the options available where it can increase the effective rate to the tariff rate. The Centre has the power to exempt few goods in public interest so it prescribes duty rates lower than the tariff rates. Such rates are called effective rates.

The department is internally analysing the list where effective rate is substantially lower than the tariff rate. We are looking at items that have the potential of generating more revenue. For increasing the effective rate to tariff rate, we dont need Parliaments approval, it can be done by notifications, a government official told The Indian Express.

The official added that the department is working on reducing revenue foregone for the current year.

Currently, for example, basic customs duty (BCD) on sugarcane planter or tuber crop harvesting machine stands at 2.5 per cent, revised downward from 7.5 per cent in the budget 2012-13. Similarly, greenhouses set up for protected cultivation of horticulture and floriculture produce enjoy a concessional rate of BCD of 5 per cent. Coffee brewing and vending machines are also taxed on concessional rate of 5 per cent.

On the excise front, the finance ministry increased the exemption limit on footwear from Rs 250 per pair to Rs 500 per pair in the budget while excise duty on iodine was reduced from 10 per cent to 6 per cent. On battery packs supplied to manufacturers of electric vehicles for use as spares, the excise duty rate was reduced from 10 per cent to 6 per cent.