Sales tax collection of states on petroleum products is set to recover sharply, Crisil Ratings said on Thursday.
According to the ratings agency, augmentation in collection will be driven by a rebound in volume, full impact of increase in Central and state taxes, and firmer crude oil prices.
"If these drivers sustain, there could be a 7-9 per cent on-year rise in sales tax receipts to Rs 1.96 lakh crore, despite an expected 25 per cent fall in collections in the first quarter on-year," it said in a statement.
As per the statement, combined monthly volume of petrol and diesel sales nearly doubled from 43 per cent in April to 85 per cent in June, though it dipped marginally in July (83 per cent on-year).
"Another kicker to improving collections is higher excise duty.
Central excise duty was raised in March and May 2020.
An increase in excise duty increases the taxable value of petrol and diesel for the levy of state sales tax," Ankit Hakhu, Director, Crisil Ratings, was quoted as saying in the statement.
