The Income Tax department has started receiving the advance tax payments. Top 15 firms have paid less advance tax and registered a sharp decline annually. The major reason of this sharp decline could be the recent domino of Demonetization.
Top firms such as Hindustan Unilever Ltd (HUL), India’s largest FMCG company by sales, Tata Consultancy Services (TCS), ICICI Bank, Ultratech Cement, Bajaj Auto, Tata Steel and State Bank of India registered a decline in the advance tax payments.
The data of IT department shows that the total advance tax payments of the top 43 firms rose only 10% to Rs 27,321 crore from Rs 24,811 crore a year ago in Mumbai. The total corporate advance tax collection of these 43 companies since the beginning of fiscal 2017 till December 15 has grown 8.12% to Rs 66,768 crore from Rs 61,751 crore a year ago.
The Financial Capital of India, Mumbai contributes more than 33% to the total direct tax collection of the country. Experts believe that the continued economic slowdown has increased since the demonetization. The decline in the advance tax payments signals this slowdown.
As per the Income-Tax Act, companies are required to pay 15% of their total advance tax in the first quarter, followed by 30%, 30% and remaining 25% in the next three quarters, respectively. Companies in India pay advance tax a fortnight before the end of every quarter on their projected earnings and these numbers are sometimes used as a proxy for their financial performance.
The FMCG leader HUL has paid Rs 560 crore as advance tax for the third quarter of FY 2017. This is a sharp decline of around 10% from last year. Analysts believe that the FMCG companies generally show secular growth. However the advance tax payments data indicate a continued slowdown in this quarter.
The largest bank in India, SBI registered a sharp 25% decline in advance tax payment. The SBI has paid Rs 1,282 crore as advance tax payment in the quarter. ICICI Bank paid Rs 1200 crore this quarter, down 27% from Rs 1650 crore from a year ago. Central Bank of India has paid Rs 165 crore against Rs 200 crore, down 17.5% for the reporting quarter while Standard Chartered Bank has paid Rs 570 crore against Rs 655 crore, down 13%.
Auto major Bajaj Auto has paid Rs 575 crore against Rs 700 crore, down 17.86% for the reporting quarter. TCS has paid RS 1540 crore against Rs 1600 crore, down 3.75% from a year ago. Advance tax payment of Tata Steel declined 11% to Rs 400 crore from Rs 450 crore a year ago. Ultratech Cement paid Rs 220 crore against Rs 250 crore, down 12%.
However Reliance Industries Ltd bucked the trend. It has paid 10% higher advance tax in the quarter. The firm is the highest advance tax payer in the Mumbai region.