Advance tax collections send early warning signals

Most private firms see lower pay-outs; govt banks save the day.

Strong signs of the economic slowdown were evident in preliminary advance tax collections for Mumbai, which accounts for 35 to 40 per cent of income tax collections.

Barring mainly government-owned banks, private sector lenders and some of India’s largest companies headquartered in India’s financial capital have reported dips in advance tax payments for the October to December quarter.

Section 208 of the Indian Income Tax Act, 1961 makes it obligatory for all companies and individuals to pay advance tax in four quarters of a financial year when the annual advance income tax payable is Rs 5,000 or more.

Collections are still underway in some centres, but the list available with the income tax department till now shows that State Bank of India has emerged as the top tax payer for the third quarter.
 

TAXING TIMES
Companies	(Advance tax for Oct-Dec quarter)		Figures in Rs crore
	Oct-Dec ‘07	Oct-Dec ‘08	% change
SBI	1088	1700	56
BoI	210	370	76
BoB	200	220	10
Central Bank Of India	73	163	123
HDFC Bank	280	250	-10.7
ICICI Bank	500	470	-0.6
IndusInd Bank	20	22	10
HDFC	215	279	30
LIC Housing	33	44	33
Reliance Industries	519	440	-15.22
L&T	180	312	73
Tata Chemicals	57	83	45.61
TCS	108	129	-19
Tata Steel	750	230	-69
Tata Motors	59	0
Indian Hotels	50	0
BPCL	117	0
Tata Sons	145	40	-72
Tata Power	25	28	-12
Ultratech	140	65	-53
Mahindra & Mahindra	60	4	-93.3

Another government-owned bank, Central Bank of India, has recorded the highest growth in advance taxes at 123 per cent. Other state-owned banks — Bank of Baroda, Bank of India and Dena Bank — have also seen robust growth in advance tax payments.

The trend, however, is reversed for private lenders with both ICICI Bank and HDFC Bank recording a fall in payments.

Among companies in this early top 20 list, Larsen & Toubro and Tata Chemicals are the only two companies to have paid higher taxes. All the others, including Reliance Industries Ltd (RIL), India’s largest company by market capitalisation, and Mahindra & Mahindra, India's largest tractor maker, trail last year’s collections. In RIL’s case, the lower tax partly reflects the sale of shares in its new refinery Reliance Petroleum.

Among the Tata group companies, collections have fallen for Tata Steel, Tata Sons and Tata Power, while Indian Hotels and Tata Motors have not paid advance taxes.

Although Tata Steel has paid lower advance taxes for the quarter, cumulative payments for three quarters of the present financial year are higher at Rs 1,675 crore against Rs 1,418 crore last year, official sources said.

Among early birds in the public sector, Bharat Petroleum Corporation Ltd has also not paid any advance taxes for the quarter.

Housing companies — HDFC and LIC housing Finance Company — have paid higher taxes despite the slowdown in the real estate sector. Official sources said that the collection for other real estate companies appear to be not so encouraging.