Mumbai/New Delhi: Advance tax payments made by the top 100 companies in Mumbai, the country’s financial hub, have risen by one-fourth, indicating that the economy’s growth trajectory has begun to stabilize and that the Union government is on target to meet revenue projections.

“If it is 20%-plus, it is very good. Part of it would have come from better cost management, which is positive," said Gaurav Taneja, partner, Ernst and Young. “Generally, there is some pick-up in sentiment and business."

The data shows manufacturing companies and Indian banks expect to have a good year, while foreign banks and public sector oil refining companies face challenges.

Also See Rising Expectations (Graphics)

The tax payments rose 24% for the quarter ending December from a year ago.

The companies were ranked by the amount of tax they pay.

Mumbai contributes about one-third of India’s total direct tax collections.

“We are happy with the tax collection as of now. However, we don’t know what is going to happen in the future," said an income-tax (I-T) official, who did not want to be named since he is not authorized to talk to the media.

Companies pay advance tax in four instalments based on their profit estimate for the year.

The figures are used as a proxy for the company’s internal estimate of financial performance.

In December 2008, corporate advance tax collections for the entire country shrank in the wake of the global slump.

In the third quarter of 2008-09, total corporate advance tax shrank 21% to Rs34,058 crore from a year earlier.

In the third quarter of the current fiscal, State Bank of India—the country’s largest bank—was the highest tax payer in the Mumbai circle paying Rs1,795 crore compared with Rs1,700 crore a year ago.

Reliance Industries Ltd, India’s most valuable company by market value, paid Rs834 crore, about 83% more than what it paid last year.

“Foreign banks haven’t performed well in this quarter," the I-T official said. Standard Chartered Bank Ltd paid Rs400 crore as tax this quarter, about 7% less than the Rs431 crore paid last year.

The Indian unit of HSBC Holdings Plc paid Rs175 crore this quarter, 56.25% less than the Rs400 crore paid last year.

Public sector oil companies haven’t paid any advance tax for the quarter as their profit has been adversely affected by the recent increase in the global price of crude, which they are unable to pass on to domestic consumers because the price is controlled by the government.

They are partly compensated in the form of oil bonds.

The three biggest public sector oil refiners Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd did not pay any tax as they suffered losses. But the I-T department hasn’t given up hope, yet.

“Oil companies’ contribution is zero because the government hasn’t issued oil bonds," said the tax official cited earlier. “We are hopeful we will get our share soon."

Oil companies can either hold the bonds to maturity (which improves cash flow due to interest payments) or sell them outright to insurance companies or mutual funds to shore up their profit.

The biggest automobile companies headquartered in Mumbai recorded growth in advance tax payment, reflecting the dramatic change in fortunes from this time last year.

Mahindra and Mahindra Ltd paid Rs195 crore compared with Rs4.5 crore a year ago. Tata Motors Ltd paid Rs100 crore in this quarter having paid nothing a year ago.

Steel maker Tata Steel Ltd paid Rs650 crore compared with Rs250 crore last year.

Graphics by Sandeep Bhatnagar/Mint