UPDATE 1-India's Q1 indirect tax growth picks up

(Adds details, background)

By Arup Roychoudhury

NEW DELHI, July 18 (Reuters) - India's indirect tax receipts grew 13.8 percent in the quarter ended June, said a senior tax official, faster than the previous quarter, due to an increase in tax rates in the budget.

Indirect tax receipts, which reflect industrial and service sector activity in the economy, grew at nearly 8 percent in the previous quarter.

The growth in indirect taxes, comprising customs, factory gate and service tax, is still lower than the annual target of 27 percent growth for the current fiscal year.

Finance ministry officials are worried that the economic slowdown may hurt tax collections, and it would not be easy to meet the targeted 5.1 percent fiscal deficit of GDP this year amid rising oil and food subsidy bills.

In the April-June period, indirect tax receipts rose to 1.07 trillion rupees ($18.16 billion) from 948.5 billion ($17.1 billion) in the year-ago period, S K Goel, chairman of the Central Board of Excise and Customs, told reporters on Wednesday.

Factory gate tax receipts grew at 29.8 percent during the first three months of the current fiscal year to 411.47 billion rupees.

In the March quarter, factory gate tax growth had dipped to nearly one percent.

Gross direct tax collections, comprising corporate and individual income tax, grew at 6.77 per cent during the June quarter, less than the targeted annual growth of 15 per cent.

($1=55.46 Indian rupees) (Writing by Manoj Kumar; Editing by Prateek Chatterjee)