Showing more green-shoots of recovery of the pandemic pummelled economy, advance tax payment by corporates has jumped 49 per cent to Rs 1,09,506 crore in the third quarter this fiscal, a CBDT source has said.
The higher growth is primarily due to the low base last fiscal year when the government had slashed corporation tax rates to a record low of 25 per cent, leading to lower payouts in Q3 of FY20. During the same quarter last fiscal, corporate advance tax stood at a low Rs 73,126 crore.
Corporate and personal income tax are the biggest components of the advance tax base, which is paid in four instalments of 15, 25, 25 and 35 per cent of the computed tax liability respectively in the four quarters.
The big boost in corporate tax collection has helped the gross tax collection improve to Rs 7,33,715 crore, down only 12.1 per cent from Rs 8,34,398 crore last year, while net collection stood at Rs 5,87,605 crore, down 13 per cent from Rs 6,75,409 crore in the year-ago period, the source told PTI on Thursday.
During the quarter, the income tax department has refunded Rs 1,46,109 crore, 8.1 per cent lower from Rs 1,58,988 crore in the same period last year.
During the first three quarters, advance corporate tax collection stood at Rs 2,39,125 crore, down 4.9 per cent from Rs 2,51,382 crore, as the first two quarters bore the brunt of the pandemic-induced lockdown.
Advance personal income tax on year-on-year basis declined 5.6 per cent to Rs 31,054 crore this quarter from Rs 32,910 crore last year, the source said, adding the same cumulatively stood at Rs 60,491 crore, down 10.4 per cent from Rs 67,542 crore.
The higher tax payout reflects the rising profitability of companies that grew 21.9 per cent in the September quarter, according to analysts. In sharp contrast, in the first quarter, manufacturing companies saw their sales, shrinking 42 per cent and net profit plunging 62 per cent.
In the second quarter ending September, total tax collection, including advance tax collection, was 22.5 per cent lower at Rs 2,53,532.3 crore, down from Rs 3,27,320.2 crore.
During the first quarter ending June, gross tax collections fell a steeper 31 per cent, driven down by a massive 76 per cent plunge in advance tax mop-up.
Personal income tax collection stood at Rs 1,47,004.6 crore in the first half of the fiscal and corporation tax at Rs 99,126.2 crore, totalling the two biggest components of direct tax revenue at Rs 2,46,130.8 crore.
In the first quarter, when the whole country was under a strict lockdown, gross direct tax collection declined 31 per cent to Rs 1,37,825 crore driven down by a massive 76 per cent plunge in advance tax mop-up.
The Budget for 2020-21 has estimated a 12 per cent increase in gross tax collections at Rs 24.23 lakh crore over Rs 21.63 lakh crore collected in FY20.
The February budget had targeted direct tax collection of Rs 13.19 lakh crore, which is 28 per cent higher than Rs 10.28 lakh crore in FY20, as the government expects a good response to the tax dispute settlement scheme 'Vivad se Vishwas'.
In Q1, the total advance collection had plunged a massive 76.05 per cent to Rs 11,714 crore from Rs 48,917 crore.
Advance corporate tax collection plummeted 79 per cent to Rs 8,286 crore in Q1 from Rs 39,405 crore, while advance personal income tax collection declined 64 per cent to Rs 3,428 crore from Rs 9,512 crore in the year-ago period, pulling down gross direct tax collection by a full 31 per cent to Rs 1,37,825 crore in Q1 from Rs 1,99,755 crore in the June 2019 quarter.
Individuals and companies pay advance tax by the 15th day of the last month of every quarter. Typically they pay 15 per cent of the evaluated tax liability in the first quarter, 25 per cent each in the next two quarters and the remaining 35 per cent in the fourth quarter