The slowdown fear, as substantiated by various parameters like the HSBC Purchasing Managers Index as well as the Index of Industrial Production, has gripped large companies but the smaller entities still seem hopeful of excellent growth. At least, tax collection figures show this trend.

While advance tax payments by top 100 companies in the second quarter ended September 15 recorded only 10 per cent growth, overall advance tax payments in the period were up 15 per cent year on year. Possibly large companies paid less tax in the second quarter instalment of advance tax, as they factored in a slowdown in the coming quarters, whereas smaller companies were expected to perform better, said a finance ministry official.

The argument is buttressed by the fact that the overall corporate tax refunds rose 16 per cent in September over the same month last year, said a finance ministry official.
 

The official said taking tax numbers as an indicator, infrastructure, real estate, steel, oil marketing companies and to some extent the automobile sector are the worst hit, while mining, FMCG, and surprisingly financial sector are also going good. He added companies in smaller cities are doing better because of a low base.

The eight core industries grew by 3.5 per cent this August, the slowest in 11 months. Just a month ago (July), the growth rate was 7.8 per cent, the highest in a year.

Industrial growth plummeted to a 21-month low of 3.3 per cent in July. The HSBC Purchasing Managers Index showed a contraction in private sector services activities last month, for the first time since April 2009, the period of the global financial crisis. Also, the manufacturing index was almost close to the contraction point.

Gross direct tax collections between April and September this year have increased 23 per cent. On the other hand, net collections, which had shown a negative trend in earlier months due to a huge rise in refunds, have turned positive for the first time by showing a growth of 7.1 per cent to Rs 1,95,000 crore in the six month period this year, against Rs 1,82,000 crore in the same period last year.

Tax refunds in the first six months so far have increased 130 per cent to Rs 62,200 crore, compared with Rs 27,000 crore last year.

Net corporate tax collections during April-September increased 2.4 per cent to Rs 1,26,000 crore, against Rs 1,23,000 crore in the year-ago period. Personal income tax receipts rose 17 per cent to Rs 69,000 crore from Rs 59,000 crore last year.

Net corporate tax mop-up in September alone grew 16 per cent to Rs 74,400 crore, compared with Rs 64,000 crore in the corresponding month a year ago. Advance tax payment from top 100 corporate assesses was up 9.9 per cent at Rs 31,707 crore for second quarter instalment, paid till September 15.

Total advance tax collections had increased over 15 per cent to about Rs 80,000 crore.

Public sector undertakings such as State Bank of India, Indian Oil Corporation (IOC) and Steel Authority of India Ltd, and private sector companies like Piramal Healthcare, Bharti Airtel and Maruti Suzuki mainly contributed to the decline in growth, as they paid less advance tax compared to last year. IOC and Piramal Healthcare did not pay any advance tax in the second quarter this year.