 "new Rs 500 currency notes")
Demonetisation has crippled sales and earnings of fast-moving consumer goods, durables and automobile companies. Companies like Hindustan Unilever (HUL) and Asian Paints have told tax officials their sales took a beating due to the high-denomination note recall on November 8.
Consumer major Hindustan Unilever on Thursday reported a decline of nearly 10 per cent in its advance tax outgo for the third quarter to Rs 560 crore from Rs 620 crore in the same period a year ago. Asian Paints saw a mere 2.7 per cent year-on-year increase in advance tax for Q3FY17.
“Advance tax collections from top consumer goods companies are disappointing, as their sales seem to have been affected by demonetisation. They have communicated this with us,” an income-tax official said.
Advance tax is a system of staggered payment of income tax in four quarterly instalments and is considered an indicator of a company’s performance in a given quarter.
Auto companies have shown subdued numbers. Two-wheeler manufacturer Bajaj Auto’s advance tax outgo was down 17 per cent to Rs 575 crore, against Rs 700 crore in Q3FY16, while Mahindra & Mahindra’s payment remained unchanged at Rs 300 crore.
Similarly, commodity players’ tax payments, too, are down, thanks to demonetisation. Cement major UltraTech paid Rs 220 crore as advance tax, down 12 per cent from the year-ago period, while Tata Steel’s advance tax payment was down over 11 per cent, year-on-year, at Rs 400 crore.
Top corporates have paid less advance tax in this quarter, except Reliance Industries (RIL). A pick-up in global crude oil prices allowed RIL to increase its tax outgo by over 10 per cent to Rs 2,600 crore, against Rs 2,355 crore same period last year.
Had it not been for RIL and the three oil marketing companies — Bharat Petroleum, Hindustan Petroleum and Indian Oil — the picture would have looked grim. For instance, if these four companies are excluded from the
combined figure of 43 companies, the rest 39 companies’ combined tax payment is up just 3.7 per cent. Together, the 43 companies’ advance tax figure is up 10.1 per cent at Rs 27,322 crore. These companies figure among the top 100 corporate in terms of advance tax payments.
Software services major Tata Consultancy Services paid Rs 1,540 crore, against Rs 1,600 crore in the same quarter last year.
Bogged down by rising non-performing assets, primarily due to the currency purge, the country's largest lender State Bank of India reported a 10.2 per cent decline in its advance tax payment for Q2FY17 to Rs 1,554 crore, compared with Rs 1,731 crore in the corresponding period last year.
Bogged down by rising non-performing assets, primarily due to the currency purge, the country's largest lender State Bank of India reported a 10.2 per cent decline in its advance tax payment for Q2FY17 to Rs 1,554 crore, compared with Rs 1,731 crore in the corresponding period last year.
Similarly, private lender ICICI Bank also reported a sharp cut in advance tax outgo for the December quarter. It paid Rs 1,200 crore, 27 per cent less than in the same quarter a year ago. “Banks’ tax numbers are disappointing, as they contribute a major part of government revenue,” said the tax official.
Life Insurance Corporation reported a sharp increase of 13 per cent in advance tax to Rs 2,235 crore in this quarter.
Private banks like Kotak Mahindra Bank and IndusInd Bank saw a sharp rise in tax payments. HDFC Bank’s advance tax outgo jumped 16 per cent, year on year, to Rs 2,300 crore and HDFC’s payment increased 14 per cent to Rs 920 crore.
Some public sector banks like Bank of Baroda, Bank of India and Union Bank also posted good jump in tax payments, but the low base of last year explains this surge. State-owned Bank of Baroda and Central Bank paid 33 per cent and 17 per cent more, respectively. Foreign banks posted mixed numbers. Citibank and Standard Chartered Bank paid Rs 710 crore and
Rs 570 crore, respectively, as advance tax.
