Available data on advance tax (AT) payments for the first quarter of the financial year indicates the manufacturing sector may take more time to recover, while the financial sector remains buoyant.
Among manufacturing sector companies, Reliance Industries first instalment of AT payments fell by 7.65 per cent to Rs 314 crore, as against Rs 340 crore during the corresponding period last year. Similarly, almost all Tata group companies, barring Tata Power, have paid lower AT.
Engineering major Larsen and Toubro has seen a 15.79 per cent rise, while Mahindra and Mahindras AT payment went up by 25 per cent.
The banking sector has put up a healthy show. According to data available so far, State Bank of India is the highest taxpayer during the first quarter of 2009-10.
Even smaller banks such as IndusInd Bank (122 per cent increase to Rs 20 crore), Dena Bank (75 per cent rise to Rs 35 crore) and YES Bank (42 per cent increase to Rs 27 crore) have followed the trend, sources said.
Successive interest rate cuts by the Reserve Bank of India and consequent downward movement in rates on government securities are a big reason for banks to garner good profits and thus pay higher taxes, which was not the case last year, said an official. Last year, interest rates remained high, leading to fund crunch and tightness in credit markets.
While collections are still underway, officials said available data pointed to a 15 per cent increase in collections on a quarter-on-quarter basis.
They added that the newly-formed large taxpayer unit (LTU) in Mumbai had so far collected Rs 892 crore of the annual target of Rs 3,703 crore for 2009-10.
The Central Board of Direct Taxes has fixed a target of direct tax collection of Rs 1,34,185 crore for the current financial year, of which Rs 91,158 crore would come from corporation tax.
Entities that earn beyond a specified level are required to pay AT in four installments with the first one due on June 15, when at least 15 per cent of the liability has to be paid. By the time the second installment falls due on September 15, at least 40 per cent of the liability for the year has to be deposited and this amount increases to 75 per cent by December 15 and 100 per cent by March 15.