Advance tax paid by the country’s top 100 companies in the second quarter (July-September) increased by 13 per cent to Rs 23,780 crore with big names like Grasim India, Bharti Airtel, Genpact and Tata Motors showing lower growth in their payments.
The first two instalments — paid on June 15 and September 15 — have resulted in a 16.4 per cent increase in collections. Advance tax paid up to September 15 stood at Rs 38,107.25 crore, against Rs 32,737 crore in the first six months of 2009-10, according to data compiled by the Income Tax Department. So far, the collections, are short of expectations as the government has budgeted for a 23 per cent rise in corporation tax this year.
Chief Economic Advisor Kaushik Basu, however, said growth in the second quarter was expected to be lower than the first quarter. The advance tax numbers also seem to point in that direction. Basu also said growth would pick up in the third quarter (October-December).
| LEADING THE PACK TOP 10 ADVANCE TAXPAYERS TILL SEPTEMBER | |||
| Company | 2009-10 | 2010-11 | % change |
| ONGC | 2,676 | 3,481 | 30.08 |
| SBI | 2,900 | 2,793 | -3.69 |
| RIL | 1,471 | 1,959 | 33.17 |
| LIC | 1,407 | 1,600 | 13.68 |
| BHEL | 1,020 | 1,171 | 14.8 |
| SAIL | 1,263 | 1,087 | -13.93 |
| PNB | 738 | 974 | 31.98 |
| DICGC | 850 | 972 | 14.35 |
| ICICI Bank | 851 | 950 | 11.63 |
| HDFC Bank | 675 | 915 | 35.56 |
| Amount in Rs crore | |||
Advance tax collections from companies during the last month of every quarter is an indicator of the financial health of the economy. The economy showed better-than-expected growth of 8.8 per cent in the first quarter of this financial year. Industrial growth, as measured by the Index of Industrial Production, also showed robust growth of 13.8 per cent in July.
A finance ministry official said the impact of an improved performance of the economy would be seen in the third quarter, as there is a lag effect in the industrial and economic growth and tax collections. The official added that the personal income tax, which was projected to remain flat this year, rose by 14 per cent so far and would compensate for any shortfall on corporate tax.
The subdued advance tax collections could also be attributed to over month-long strike called by income-tax employees, resulting in slowing down of search and seizure operations, said the official, and added that the department would take steps (read income-tax raids) to improve collections.
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Besides, sectors such as cement have been affected due to lower production, partly due to more than abundant rains and also because of problems in getting railway wagons to ferry raw material and finished goods. Cement companies also contributed significantly in spoiling the show. All cement majors, including ACC, Ambuja Cement, Ultratech Cement, Shree Cement and Lafarge India Cement, showed a decline in tax payments in the range of 10 per cent to 92 per cent.
ONGC, SBI vie for top slot
It’s a fight between two public sector companies that the government will not object to. Oil and Natural Gas Corporation (ONGC) and State Bank of India (SBI) are fighting for the top taxpayer’s slot.
SBI paid Rs 1,924 crore as the second instalment, 5.02 per cent higher than the Rs 1,832 crore it had paid in September 2009. In contrast, ONGC paid Rs 1,093 crore, 24.2 per cent more than the Rs 880 crore it had paid a year ago.
In fact, the upstream oil company is placed third in the top taxpayers’ list this quarter, behind Reliance Industries which paid Rs 1,306 crore, an increase of 12.88 per cent from the corresponding period last year.
But if tax payments for the first two quarters are put together, ONGC has emerged on top, having paid Rs 3,481 crore, an increase of 30.08 per cent from what it paid during the same period last year.
SBI is placed second, having paid Rs 2,793 crore, 3.69 per cent less than Rs 2,900 crore it paid a year ago.
There is churn in the next level too, with private sector lenders ICICI Bank and HDFC Bank replacing NTPC and Tata Steel in the list of top 10 taxpayers up to September 2010.
Last year, NTPC was the sixth largest advance taxpayers, while Tata Steel had grabbed the tenth position.