Advance corporation tax collection falls over 10% in Apr-Mar FY20

The collection of advance tax paid by corporate houses fell over 10 per cent during April-March 15 of 2019-20. This decline, after the deadline of the fourth instalment ended on March 15, could lead to a revenue shortfall of at least Rs 35,000 crore in the total direct tax collections of the current fiscal, tax officials in the know said. 

Even the tax settlement resolution scheme, Vivaad Se Vishwas, may not help shore up coffers due to the Covid-19 pandemic that has halted all outreach programmes by the income-tax department, an official said. 

Total direct tax collections fell over 5 per cent, standing at Rs 9.57 trillion, till March 18 against the revised target of Rs 11.7 trillion for the current fiscal — leaving a gap of Rs 2.13 trillion.

Further, the advance tax collection comprising corporate houses and individuals declined by over 5 per cent at Rs 3.55 trillion during April-March 14 of FY20. Of this, advance tax collection receipts by companies stood at Rs 2.67 trillion till March 14, down by 12.4 per cent over Rs 3.05 trillion a year ago. Advance personal income-tax showed a marginal increase of a little over 3 per cent till March 14. 

The Centre was optimistic about achieving the direct tax collection target after revising it downwards to Rs 11.7 trillion from Rs 13.35 trillion for this fiscal. The government has revised the Budget estimation on account of the slash in corporation tax rates estimated to hit the exchequer by Rs 1.45 trillion in the current fiscal.

Source: Income Tax Dept

Sources felt the new resolution scheme is likely to add Rs 1-1.5 trillion in the direct tax collection account. Vivaad Se Vishwas, which was notified on March 17, is not seeing favourable results due to reluctance from large taxpayers, especially state-run firms, where thousands of crores have been stuck. Besides, top garner Mumbai saw a negative growth of 1.04 per cent between April 1 and March 14. The city collected Rs 2.62 trillion against the revised target of Rs 3.78 trillion during the period.

“Overall, revenue mobilisation is facing heat. We have yet to do concrete analysis of the slowdown, but it is difficult to say that it is only because of the rate cuts. Other factors, too, have played a significant role,” the official cited above said. 

About 45 per cent of the collection comes from advance tax and the rest from TDS (tax deduction at source), among others. TDS collection, on the other hand, showed a growth of 8.3 per cent at Rs 4.83 trillion during April-March 14. Self assessment tax (balance tax after TDS), too, showed good numbers, with total collection of over Rs 83,000 crore during the period, up by 5.2 per cent. 

Assessees falling within the ambit of advance tax payment are required to pay 15 per cent of the calculated tax liability in the first quarter, 25 per cent in the second, and the rest in equal instalments in the remaining two quarters.