In a clear affirmation that India Inc is on the mend, advance tax payments by companies have finally clawed out of the red to register a 14.7% growth, amounting to Rs 44,010 crore, in the second quarter of 2009-10. This is a turnaround from the first instalment paid by June, when the tax payment shrunk by 3.7% to Rs 20,728.60 crore.
A review of the top taxpayers shows that public sector banks, companies in consumer durables, as well as automobile manufacturers are at the vanguard of the recovery. But sectors like real estate, metals, fertiliser and hospitality continue to be impacted by the slowdown.
Indian tax rules state that anyone expecting to pay tax of over Rs 5,000 in a year has to make payments in advance in the previous financial year. Assessees pay the tax in four instalments clearing 45% of their dues by September 15.
Despite an upsurge that presages a more robust performance of the industrial sector in the second and third quarters, 12 of the 50 top companies paid less tax in September 2009, compared with last fiscal.
Direct tax collections have reached nearly Rs 1.4 lakh crore this fiscal, while indirect tax receipts too are slowly rising. Central excise duty collections in August were up 22.5% over the previous month at Rs 8,979 crore, corresponding with the 6.8% rise in industrial output in July.
For the fiscal, the Centre estimates total tax receipts at Rs 7 lakh crore, including around Rs 3.7 lakh crore as direct tax. Current trends show the government is on track to keep the huge fiscal deficit of Rs 4 lakh crore or 6.8% of the GDP in 2009-10, under control.
Among companies, SBI pipped ONGC as the top advance tax-paying company. The public sector bank paid Rs 1,832 crore in the September instalment, 17.4% higher than the Rs 1,560 crore it paid last year. ONGCs tax outgo dipped by 25.5% to Rs 1,796 crore in the second tranche this fiscal, compared with last years Rs 2,412 crore.
In the telecom sector, Bharti Airtels advance tax outgo rose by a whopping 220% to Rs 484 crore, while Infosys registered a 100% increase in its advance tax payment. Similarly, Mukesh Ambani-led Reliance Industries Ltd registered a 69% jump in its tax payment to Rs 1,1,57 crore and Maruti Suzuki paid 97.76% higher tax at Rs 265 crore in the second quarter, against a year earlier.
Companies that paid less this year include SAIL. It paid 13% less advance tax in the September 09 instalment at Rs 918 crore, against Rs 1,061 crore a year earlier. Others like ICICI Bank (-12%), Citibank (-20.79%), HSBC (-38.7%) Ambuja Cements (-14%) and NMDC (-25%) too saw a dip in their advance tax outgo in the second quarter.
NR Bhanumurthy, a professor at NIPFP at New Delhi, said government expenditure was a worry line. We have to see how industry performs. So it is too early to say if the fiscal deficit will be contained despite the buoyant revenue projections.