When the world was reeling under a severe financial crunch, India went out to prove another point -- its banking business was not only profitable but had outperformed all other sectors.
The icing on the cake was the first quarter advance (direct) tax results when for the first time in the history of corporate India, a bank became the country's highest tax-payer, leaving behind numero uno Oil and Natural Gas Corporation (ONGC).
According to the advance tax data for the first quarter April-June 2009, the country's largest bank State Bank of India posted a handsome growth in its profit while depositing Rs 1,068 crore in the tax kitty against Rs 890 crore deposited by the oil behemoth for the same period.
The profitability of the state-run SBI zoomed by more than 61% as against Rs 663 crore it had paid in the same period last year when the economy was growing at a rate of 9%. During the same period, ONGC's profit came down by 33% from Rs 1,333 crore in Q1 last year to Rs 890 crore this time.
While all the results of advance tax payments for Q1 are yet to be compiled by the Central Board of Direct Taxes (CBDT), the available data reveal that among the top 25 companies, 11 are from the banking and financial sector and each of them paid the government between Rs 100 crore and Rs 1,000 crore for the April-June 2009 period. While the profit margins of government banks range between 45% and 90%, private sector banks too have posted hefty growth but not in that degree.
The top 11 financial institutions which figure in the list of 25 highest tax-payers in Q1 are: SBI, ICICI Bank, HDFC Bank, Standard Chartered Bank, PNB, Bank of India, HSBC, Bank of Baroda, Citibank, HDFC Ltd and NABARD.
The highest growth of 89% has been posted by Bank of India which has paid Rs 231 crore tax, followed by Bank of Baroda which has paid Rs 210 crore with a growth of 50% and PNB with Rs 236 crore marking an increase of 48% as compared to last year.
Among the private and foreign banks, ICICI Bank has paid the highest tax of Rs 350 crore in Q1, followed by HDFC Bank Rs 250 crore, HSBC Rs 225 crore and Citibank Rs 180 crore.
Among the others industries, Reliance and Tata seem to be among the major losers. The total Q1 tax payment of the diversified RIL was Rs 314 crore as against Rs 340 crore during the same period last year. Tata Steel paid Rs 230 crore against Rs 356 crore last year. SAIL's margins too have plunged as it paid Rs 345 crore tax against Rs 457 crore last year.
The net direct tax collections in the first two months of the current fiscal, the data for which was released by CBDT earlier, had revealed that the economy was expanding at a brisk pace after nearly six months of slowdown.
The net tax collection in April-May of 2009-10 stood at Rs 24,158 crore, up from Rs 22,840 crore collected during the boom period of 2008. The growth in May was sharper with tax collection registering a 17% rise compared to the same period last year.