Enhanced profitability projections by banks have positively impacted the governments coffers as public and private sector banks paid higher advance tax in the first tranche that was due on June 15.
According to information available with the finance ministry, sectors like banking, insurance, cement, pharma, power and chemicals have paid more advance tax on account of higher profitability projections this year.
The State Bank of India has paid an advance tax of around Rs 350 crore compared with Rs 280 crore in June last year, while the HDFC has paid around Rs 80 crore against Rs 60 crore last year.
Standard Chartered has also paid around Rs 100 crore as tax compared with just Rs 64 crore in June 2005.
Add pharma companies to the list. Glaxo paid around Rs 27 crore against Rs 21 crore last year, while Cipla paid Rs 27 crore compared with Rs 20 crore in June 2005.
Cement company ACC also paid around Rs 53 crore to the government against Rs 10 crore in June 2005. Tata Chemicals paid Rs 28 crore compared with Rs 25 crore in the same period last year.
Every year, the government mops up 45 per cent of its direct tax payments by way of advance tax. Improving advance tax collection is therefore an important part of the income-tax departments strategy to improve tax collections.
The CBDT has asked its field formations to advise taxpayers against deferring their liability under advance tax and paying it under self-assessment.
Officers have also been asked to persuade corporates with tax liability under the minimum alternative tax, to pay taxes at the advance-tax stage rather than at the self-assessment stage.
In addition to monitoring advance tax payments by the top 100 taxpayers, commissioners have also been asked to monitor the payment of advance tax by taxable local authorities.