Initial advance tax numbers offer a pretty good picture as far as collection by the IT department goes. The State Bank of India, the countrys largest bank, continues to lead the list of the major corporate tax payers in Mumbai. But in contrast to earlier trends, private companies are catching up fast.
Last year, the total tax collection rose 30% and indications are that this year revenue collection could go up by more than 40%. While the SBI shelled out Rs 1,090 crore for the three-month quarter ended December 15, 2007, Reliance Industries (RIL) may just be the second-largest tax payer in the country with an outgo of Rs 1,045 crore for the same period. The SBI tax figure is 26.7% higher than what it paid in the year-ago period.
On the other hand, RIL which paid Rs 440 crore during the same period last year, has registered an increase of 137%. Till a few years ago, it was considered a zero-tax company, thanks to tax planning that involved huge investments in infrastructure projects.
Since most of its projects have become operational now, RILs tax outgo also showed a proportionate increase, enabling it to emerge as one of the top tax payers in India.
According to figures available, the second-biggest bank ICICI Bank has paid Rs 500 crore during the three-month period while Bajaj Auto, the countrys largest two-wheeler manufacturer, has a tax outgo of Rs 175 crore during the said period. Videocon, the durable major, has an outgo of Rs 30 crore.
According to the provisions of the Income Tax Act, advance taxes are paid in four instalments in June, September, December and March. The past couple of years have, in fact, seen a surge in tax collection.
This can be attributed to a sustained buoyancy in the economy and a reduction in the tax rate from 35% to 30%. If revenue collection grows at 40%, it will mark a new high in the history of tax collection in India. For years, collection has been in the range of 15-20% annually.