Covid-19 impact: Aviation, automobile sectors see worst tax outgo in Q1

Sales across sectors have been hit by pandemic-induced lockdown, but automobile and aviation have been the worst performers in terms of tax outgo.  The aviation sector, particularly airlines, made no tax deposit in the first quarter. 

Maruti Suzuki, Bajaj Auto, and Hero MotoCorp’s tax collections were down 60-85 per cent. Even heavyweight taxpayers Reliance Industries (RIL) and Oil and Natural Gas Corporation (ONGC) showed a dip of 36 per cent and 74 per cent, respectively, in April-June FY21.

Tax officials have attributed the dip to tax reforms, including changes in the corporate rate structure and higher refunds issued.

The numbers, compiled by the I-T Department, suggest Maruti Suzuki’s first-quarter tax outgo stood at Rs 50 crore against Rs 318 crore in the same period a year ago, a dip of 84 per cent.

Hero MotoCorp paid Rs 64 crore, down 72 per cent from Rs 228 crore. Bajaj Auto’s is also down 28 per cent, and it paid Rs 180 crore.

Even top fast-moving consumer goods (FMCG) firms such as ITC and Hindustan Unilever (HUL), which have seen decent economic activity and growth in sales, have deposited 20-40 per cent less tax than what they had in the same period last financial year.

ITC paid Rs 520 crore against Rs 750 crore, a dip of 30 per cent. HUL and Procter & Gamble paid Rs 330 crore and Rs 22 crore, respectively, which is 13 per cent and 40 per cent lower than in the year-ago period.

Britannia, on the other hand, has been slightly better, and paid Rs 70 crore against Rs 73 crore earlier. Other mid-cap FMCG firms such as Godrej Consumer Products, Nestle, and Dabur have made lower payments this quarter. 

Nestle is down 31 per cent at Rs 90 crore against Rs 130 crore earlier. For Dabur and Godrej Consumer Products, they are 24 per cent and 22 per cent, respectively. 

“Only a few companies including pharmaceutical firms posted slight growth in tax payment against the same quarter last financial year,” said an official.

Experts did not buy the rate-structure argument. “The reasons for the drastic fall in tax collection cannot be just changes in tax policy because very few companies opted for it. A possible reason could be slowdown, coupled with the pandemic impact, which would continue for two-three quarters,” said a tax expert.

Tax collection throws up a key question whether the department would meet the stiff target of Rs 13.19 trillion for FY21. As of June, gross direct tax collection was Rs 1.74 trillion, down 24.4 per cent from Rs 2.30 trillion in the same period of the previous year. This is due to dips in advance tax collection, which was down around 40 per cent in the first instalments.