The Income-Tax department intends to collect Rs 2,000 crore more this year from multinational corporations operating in India. If it meets the target, MNCs would fork out Rs 12,000 crore as income tax.
Out of the over 3,000 MNCs in India, those headquartered in Mumbai may cough up around Rs 7,000 crore in tax during the current financial year. The projection excludes the capital gains tax the department is planning to levy on M&A (mergers & acquisition) moves like the Hutch-Essar deal.
Sources said foreign entities have become more transparent in their dealings with the tax department, thanks to the actions initiated by its international tax division against some foreign banks. Another compelling factor is the strict transfer pricing rules that were put in place since 2001.
The department had levied an additional tax of around Rs 1,100 crore last year from foreign entities after verifying the tax returns filed by them. Of this, a sizeable part came from international banks, seemingly the biggest beneficiaries of the countrys booming economy.
Foreign banks top the chart of largest tax-paying overseas entities operating in India. During the fiscal year ended March 2007, Standard Chartered Bank, HSBC and Bank of America topped the chart of MNC taxpayers, with each of them paying between Rs 500 crore and Rs 800 crore.
However, if the international tax division succeeds in generating capital gains tax out of the recent M&A transactions, the collection will rise manifold.
It is learnt that the I-T department has completed the groundwork to have a legal framework for making them pay capital gains tax.