Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Home-page / Q1 corporate tax collections top estimates
BackBack

Q1 corporate tax collections top estimates

Q1 corporate tax collections top estimates

Premium

New Delhi: Corporate tax collection in India, the primary driver of government revenue, appears to be more than the budget estimates in the fiscal first quarter (Q1) so far (through 15 June), countering a general belief that a projected slowdown in economic growth could hurt such tax collections.

According to preliminary finance ministry data, advance tax payments by companies in the income-tax department’s Delhi zone were Rs3,207 crore in the April-June quarter, up 26.27% from a year ago. The government had budgeted for corporate tax growth of 21.6% in 2008-09.

The Delhi region generally accounts for a little more than 10% of the total corporate tax collections, while Mumbai zone accounts for the major share.

Indian shares rose Tuesday on account of speculation that advance tax payments indicated accelerating profit growth, according to Bloomberg.

“It is a pleasant surprise," said Gaurav Taneja a partner at Ernst and Young, the audit and consulting firm, reacting to the Delhi collection trend.

Taneja said it might be necessary to make a nuanced interpretation of the advance tax payments data as the bottlenecks in the economic structure mean that negative developments can take a while to show up. For instance, the increase in inflationary pressures in the economy could take a while to show up in companies’ financial statements, he added.

Firms make advance tax payments four times in a fiscal year, June, September, December and March, based on their estimates of the year’s profit. Advance tax data generally serves as a proxy for industry’s profit expectation in a year.

Indeed, a negative operating environment in some sectors was reflected in the advance tax data.

Advance tax payments of Maruti Suzuki India Ltd and Hero Honda Motors Ltd, India’s largest car maker and motorcycle manufacturer, respectively, indicate lacklustre profit expectations for 2008-09. The auto industry has been hurt by rising input costs and flat sales.

Maruti’s advance tax payment in the first quarter was Rs95 crore, a 7.95% increase in tax payments over the corresponding period of the previous year. Meanwhile, Hero Honda’s advance tax payment fell 11.82% to Rs38.51 crore compared with last year.

Two telecom companies in the Delhi zone, state-owned Bharat Sanchar Nigam Ltd and Bharti Airtel Ltd, showed contrasting advance tax trends.

Bharti’s advance tax payment in first quarter was Rs72 crore, down by 51% from last year. A Bharti spokesman said: “Advance tax amounts for these two periods cannot be compared on a stand-alone basis. These should be seen together with the TDS (tax deducted at source) on our revenues liable for such TDS." He didn’t elaborate.

BSNL’s advance tax payment during the same period was Rs311.97 crore, up 197.48% from a year ago.

Public sector companies, which are the largest taxpayers in the Delhi zone, showed robust growth in advance tax payments in the first quarter.

GAIL (India) Ltd, a public sector gas transmission company, paid advance tax of Rs335 crore in the first quarter, higher by 142.75% compared with last year.

Bharat Heavy Electricals Ltd, India’s largest manufacturer of power generation equipment, paid an advance tax of Rs300 crore, higher by 42.86% in relation to the corresponding period of the previous year.

ONGC Videsh Ltd, a state-owned oil exploration company, paid an advance tax of Rs163 crore in the first quarter, an increase of 30.40% over the previous year.

Advance tax payments of two public sector firms, Steel Authority of India Ltd (SAIL) and NTPC Ltd, indicated the possibility of a lacklustre year. SAIL’s advance tax payment in the first quarter was Rs457 crore, higher by 1.56% over the corresponding period of the previous year. NTPC’s advance tax payment in the same period was lower by 6.93%.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 17 Jun 2008, 11:56 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App