Multinational companies operating in India have paid a record Rs 10,000 crore tax in the financial year ended March 31, 07. The amount, collected by the international tax division of the Income Tax Department, is 40% higher than the previous years collection from the set of companies.
The surge in the tax figure is quite unprecedented as the usual rate of increase in collection is about 15-20 %. Incidentally, the amount accounts for more than 7% of Indias corporate tax collection of about Rs 140,000 crore last fiscal. Tax department sources said a large part of the taxas much as Rs 6,500 crorehas been paid by MNCs that have Mumbai as their local headquarters. Of this, Rs 1,100 crore has been generated through additional demands following scrutiny of assessments.
So what has triggered this bout of tax collections from MNC? An active international tax division and the newly-created transfer pricing regime in India have driven most of MNCs to instill a greater transparency in their dealings. Its perceived that the age-old practice of concealing real income by inflating expenditures has become tougher, resulting in several corporates opting for realistic tax returns and a more transparent operation.
The economic buoyancy and prosperity in MNCs Indian business are the other reasons attributed to the high tax yield. Among the foreign entities, the international banks as a group seem to be one of the biggest beneficiaries of Indias booming economy; foreign banks top the chart of largest tax-paying overseas entities operating in the country. Take the case of the Standard Chartered Bankthe biggest foreign bank in India. It tops the chart with a record payment of Rs 790 crore as against the previous fiscals remittance of Rs 515 crorea 50% jump.
Similarly, HSBC, another British bank, has remitted Rs 704 crore, an increase of more than 30% over the previous years outgo of Rs 537 crore. HSBC is followed by Citibank with a Rs 638-crore tax outgo. The US banks previous tax outgo was Rs 460 crore. Deutsche Bank has paid Rs 214 crore against the Rs 177 crore the previous year. Bank of America has recorded a 100 % increase in its tax outgo, having paid Rs 145 crore as against Rs 88 crore previous year. Barclays paid Rs 100 crore (Rs 86 crore).
Investment banking and securities group JP Morgan, meanwhile, has recorded a five-fold jump in its tax outgo. It paid Rs 80 crore as against the previous years Rs 15 crore. Possibly the only entity that showed a dip in tax was French bank Societe Generales with an outgo of Rs 12 crore, down Rs 3 crore from the previous years Rs 15 crore.