Advance tax collections send early warning signals
December, 16th 2008
Most private firms see lower pay-outs; govt banks save the day.
Strong signs of the economic slowdown were evident in preliminary advance tax collections for Mumbai, which accounts for 35 to 40 per cent of income tax collections.
Barring mainly government-owned banks, private sector lenders and some of Indias largest companies headquartered in Indias financial capital have reported dips in advance tax payments for the October to December quarter.
Section 208 of the Indian Income Tax Act, 1961 makes it obligatory for all companies and individuals to pay advance tax in four quarters of a financial year when the annual advance income tax payable is Rs 5,000 or more.
Collections are still underway in some centres, but the list available with the income tax department till now shows that State Bank of India has emerged as the top tax payer for the third quarter.
Another government-owned bank, Central Bank of India, has recorded the highest growth in advance taxes at 123 per cent. Other state-owned banks Bank of Baroda, Bank of India and Dena Bank have also seen robust growth in advance tax payments.
The trend, however, is reversed for private lenders with both ICICI Bank and HDFC Bank recording a fall in payments.
Among companies in this early top 20 list, Larsen & Toubro and Tata Chemicals are the only two companies to have paid higher taxes. All the others, including Reliance Industries Ltd (RIL), Indias largest company by market capitalisation, and Mahindra & Mahindra, India's largest tractor maker, trail last years collections. In RILs case, the lower tax partly reflects the sale of shares in its new refinery Reliance Petroleum.
Among the Tata group companies, collections have fallen for Tata Steel, Tata Sons and Tata Power, while Indian Hotels and Tata Motors have not paid advance taxes.
Although Tata Steel has paid lower advance taxes for the quarter, cumulative payments for three quarters of the present financial year are higher at Rs 1,675 crore against Rs 1,418 crore last year, official sources said.
Among early birds in the public sector, Bharat Petroleum Corporation Ltd has also not paid any advance taxes for the quarter.
Housing companies HDFC and LIC housing Finance Company have paid higher taxes despite the slowdown in the real estate sector. Official sources said that the collection for other real estate companies appear to be not so encouraging.