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Signs of Indian Economy returning to track soon! Companies deposit 49 percent more advance tax

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Mumbai. There have been signs of revival in the economy affected by the Corona crisis. Advance tax payment of companies jumped 49 percent to Rs 1,09,506 crore in the third quarter of the current financial year. CBDT sources gave this information. The reason for this increase may be mainly due to the weakening of the comparative base in the same period of the last financial year. In the third quarter of the last financial year 2019-20, the government reduced the rate of company tax to a record low of 25 percent. This reduced the tax payment of companies. In the same quarter of the last financial year, advance company tax collection was Rs 73,126 crore. Company and personal income tax is the most prominent in advance tax payment.

The concerned entity pays 15, 25, 25 and 35 percent in four quarterly installments based on the assessment of its tax liability. The source told PTI that gross tax collections increased to Rs 7,33,715 crore in the quarter under review due to increase in company tax collection. This is just 12.1 percent less than last year’s Rs 8,34,398 crore. The net tax collection stood at Rs 5,87,605 crore, which is 13 percent less than the Rs 6,75,409 crore received a year ago. During the third quarter, the department refunded Rs 1,46,109 crore to the taxpayers, which is 8.1 percent less than the Rs 1,58,988 crore refunded in the same quarter of the previous financial year 2019-20. Overall, the collection of advance company tax was Rs 2,39,125 crore in the first three quarters of the current financial year.

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This is 4.9 percent less than Rs 2,51,382 crore received in the same period last year. The reason for this was the effect of ‘lockdown’ in the first two quarters of the current financial year. According to the source, the advance personal income tax declined by 5.6 percent to Rs 31,054 crore on an annual basis. It was Rs 32,910 crore in the third quarter a year ago. Overall, the advance personal income tax collection so far was Rs 60,491 crore in the current financial year, which is 10.4 percent less than the Rs 67,542 crore in the same period of the previous fiscal. According to analysts, the increase in tax payments reflects companies’ profits, which grew 21.9 percent in the September quarter. In contrast, sales of manufacturing companies declined by 42 percent and net profit by 62 percent in the first quarter. Total tax collections, including advance tax collections, declined by 22.5 percent to Rs 2,53,532.3 crore in the second quarter ended September 2020 from Rs 3,27,320.2 crore in the same quarter of the previous fiscal. Gross tax collections in the first quarter ended June were down by 31 percent. Whereas the advance tax collection had fallen by 76 percent. Personal income tax collection stood at Rs 1,47,004.6 crore in the first half of the current financial year while company tax stood at Rs 99,126.2 crore. Thus, two important elements in direct tax revenue were Rs 2,46,130.8 crore. In the first quarter, gross direct tax collections fell by 31 per cent to Rs 1,37,825 crore due to Corona virus epidemic and ‘lockdown’ for its prevention.

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This was 76 percent less than the same quarter of the previous financial year. In the budget for the fiscal year 2020-21, gross tax collection has been estimated to increase by 12 percent to Rs 24.23 lakh crore. It was Rs 21.63 lakh crore in 2019-20. In the budget presented in February, the direct tax collection was estimated to be Rs 13.19 lakh crore, which is 28 percent more than the Rs 10.28 lakh crore in 2019-20. The reason for this is that the government hopes to get a good response to the dispute resolution scheme ‘Dispute to Confidence’. Advance company tax collection fell 79 percent to Rs 8,286 crore in the first quarter from Rs 39,405 crore in the same quarter a year ago. At the same time, advance personal income tax collection declined by 64 percent to Rs 3,428 crore in the first quarter, compared to Rs 9,512 crore in the same quarter a year ago. This reduced gross direct tax collection by 31 percent to Rs 1,37,825 crore in the first quarter from Rs 1,99,755 crore in the same quarter of 2019-20 a year earlier.

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