The second instalment of advance tax collections this financial year has fallen short of the Income Tax Department’s expectations, despite a robust increase in pay-outs from banks and financial services companies.
Advance tax payments in the second quarter (July-September) rose by 13-14 per cent, compared to a year ago, but it was below expectations, Chief Income Tax Commissioner P P Srivastava (Mumbai region) said.
While all-India data are still being collated, collection in the Mumbai region, which accounts for more than half the direct tax kitty, is an indicator of the overall trend. Taxpayers have to pay income tax in four instalments, with the deadline for the second tranche being September 15.
The mop-up is often used by economists and the government as a lead indicator of economic performance.
The overall growth in direct tax collections have also slowed in recent months. Collections in August had risen by a little over 4 per cent to Rs 14,465 crore. Led by a 17 per cent rise in corporation tax collections, net direct tax receipts during April-August grew by 13.9 per cent to Rs 1,00,112 crore. During July-September, the pace of economic growth was also expected to be marginally lower than the first quarter, Chief Economic Advisor Kaushik Basu said earlier this week.
In the second instalment of advance tax collections, the biggest contributor was State Bank of India, the country’s largest lender, which paid Rs 1,924 crore as advance tax in the July-September quarter as against Rs 1,832 crore a year ago, an increase of a just over five per cent.
Life Insurance Corporation of India, the largest insurer in the country, paid 13.6 per cent higher advance tax, which was estimated at Rs 1,067 crore, compared to Rs 939 crore in the corresponding period last year.
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ICICI Bank and HDFC Bank, two top private sector lenders, paid Rs 600 crore each in the second quarter, against Rs 501 crore and Rs 425 crore, respectively, in the year-ago quarter.
Another large contributor was Mukesh Ambani-led Reliance Industries, which paid Rs 1,306 crore, around 16 per cent more than Rs 1,157 crore it paid in the same period last year.
Tata Steel paid Rs 500 crore, compared to Rs 400 crore in the same quarter last year.
Among auto companies, which have posted record sales in the past few months, two-wheeler major Bajaj Auto paid Rs 243 crore against Rs 170 crore a year ago. Mahindra & Mahindra’s tax pay-out grew to Rs 158 crore from Rs 112 crore.
However, Tata Motors saw a decrease in its tax payment to Rs 95 crore from Rs 130 crore in the year-ago quarter.
Cement companies were the clear laggards in advance tax contributions with all the largest players paying less than they had a year ago. ACC’s advance tax payment dipped to Rs 60 crore from Rs 150 crore, while UltraTech saw its advance tax contribution decrease to Rs 60 crore, less than half of Rs 125 crore it paid in the same period last year.