India Inc continues good show, Q1 advance tax payment up 15%
Indian companies paid about 15% higher advance tax in April-June compared to a year ago, belying apprehensions of a slowdown and indicating better corporate earnings ahead. Companies across sectors - manufacturing, FMCG, banking and finance - have paid higher advance tax in the first installment.
"This is the first quarter, so considering that it (advance tax collection) is quite satisfactory... growth is likely be more in the second, third and fourth quarters," PP Srivastava, chief commissioner of income tax, Mumbai, said. Advance tax, which is based on taxpayers' projected earnings for the year, is paid in installments in June, September, December and March.
Companies are expected to pay 15% of their estimated annual tax in the first installment. The healthy growth in tax mopup comes after data last week showed industrial production had fallen to a seven-month low in April to 6.3%, hurt by rate increases. The numbers will not only allay fears of a slowdown but also help the Centre meet any additional expenses.
The government, which is bankingon better tax revenues to meet any rise in expenditure due to higher subsidy outgo, has budgeted Rs 5.33 lakh crore from direct taxes in the current fiscal. Direct tax collections will need to grow by 19% for the government to meet its budget estimates. The finance ministry has been worried over impact of any moderation in growth on collections.
"I would like to sound a note of caution in respect of targets for direct tax that has been set for this year at Rs 5.32 lakh crore," finance secretary Sunil Mitra had said at a tax conference last month. Mitra had also said that the Central Board of Direct Taxes would need to moderate refunds. Reliance Industries , Bajaj Auto, L&T, Hindalco, Tata Chemicals, Tata Steel , TCS paid higher advance tax.
Among banks, State Bank of India , HSBC, HDFC Bank, Bank of Baroda , Dena Bank , ICICI Bank reported higher tax outgo, according to an IT official. Among oil marketing firms, BPCL paid an advance tax of Rs 77 crore, against Rs 126 crore in the year-ago period. HPCL paid Rs 62 crore, as against Rs 61 crore last year.
Reliance, which has been among the top five tax payers, paid Rs 900 crore, against Rs 650 crore in the same quarter last year. Bajaj Auto paid Rs 125 crore, as against Rs 110 crore last year, while Tata Motors showed a marginal dip to Rs 62 crore. HDFC Ltd paid Rs 250 crore, against Rs 215 crore last June.
The banking sector was led by State bank of India, which paid Rs 1,100 crore as advance tax, against Rs 850 crore in the last fiscal. Union Bank paid Rs 175 crore, against Rs 168 crore last year. ICICI Bank paid Rs 390 crore as against Rs 50 crore last June while HDFC Bank paid Rs 400 crore, against Rs 315 crore in the same period last year.
Consulting and software major TCS has almost doubled its advance tax payment to Rs 240 crore, as against Rs 126 crore last year. Life Insurance Corporation's tax for the quarter was marginally up at Rs 580 crore.
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