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Most marquee companies have increased their advance tax payment for the third quarter (October-December, or Q3) by double digits. It’s a sign that Corporate India is on the road to recovery.
Engineering and construction conglomerate engineering company Larsen & Toubro (L&T), state-owned heavyweight Indian Oil Corporation (IOC), information technology (IT) major Infosys, Tech Mahindra, and private banks ICICI Bank and Kotak Mahindra Bank led the table.
L&T made a tax payment of Rs 1,595 crore till December 15 this financial year — 478 per cent higher than Rs 275 crore in the corresponding period of 2019-20. The first two quarters were muted, clearly showing a jump in Q3.
State-owned heavyweights, such as IOC, reported a tax outgo of Rs 1,640 crore during the same period — a jump of 24 per cent year-on-year (YoY).
Infosys delivered a tax payment of Rs 3,350 crore — a jump of 19 per cent in the first three quarters, owing to momentum in strategic deals, coupled with lockdown, which has caused better revenue for IT players.
Tech Mahindra also increased its tax outgo by 14.5 per cent at Rs 870 crore. However, Tata Consultancy Services reported a slight fall of 3.7 per cent, making a payment of Rs 4,190 crore, in the first three quarters of 2020-21, said official sources. This was followed by private-sector banks, including ICICI, which saw a jump of 16.6 per cent, with a tax payment of Rs 2,975 crore. Kotak Mahindra Bank was up 15.5 per cent, with a tax outgo of Rs 1,710 crore. Tax payment by HDFC Bank stood at Rs 8,750 crore, which is 3.3 per cent higher than the same period last year.
Besides IOC, other state-owned heavyweights such as State Bank of India (SBI), Life Insurance Corporation (LIC) of India also showed significant increase in their tax payments. For instance, SBI reported tax payment of Rs 7,081 crore (up 3.7 per cent). LIC was up 0.5 per cent, with a tax payment of Rs 7,401 crore.
By Q3, many companies had paid around 75 per cent of their tax liability. “In the current financial year, the advance tax of the first three quarters has jumped on improved macroeconomic environment amid the Covid-19 pandemic,” said a government official.
Since there was a corporate tax rate cut last year prior to Q3, it resulted in a low base. So standalone figures of the October-December quarter of this financial year are much higher, compared with last year, added the official.
According to him, the first quarter was calm due to the beginning of the pandemic-induced lockdown. However the situation improved in the July-September quarter, but significant improvement was seen in the October-December quarter.
However, the pandemic continues to batter auto majors like Hero MotoCorp and Maruti, whose tax outgo were down 42 per cent and 22 per cent, respectively. Hero MotoCorp made a tax payment of Rs 526 crore year-to-date (YTD), against Rs 918 crore in the same period last year. Maruti paid Rs 700 crore — 22 per cent less than a year ago.
Other big companies also saw decline in their advance tax payments. Tata Steel saw 68 per cent fall in its tax payment for the first three quarters at Rs 300 crore, while Oil and Natural Gas Corporation paid 80 per cent less than last year at Rs 1,153 crore, against Rs 6,020 crore. ITC was also down 22 per cent: it reported a tax outgo of Rs 2,810 crore, against Rs 3,620 crore a year ago.
On reports of public-sector bank mergers, most state-owned banks are in negative territory, indicated the figures. This includes Bank of Baroda, which reported tax payments of Rs 1,400 crore, down 14.6 per cent. Punjab National Bank saw drastic fall of 72 per cent: it reported payments of Rs 339 crore, against Rs 1,210 crore a year ago. Canara Bank has surprisingly shown a jump of 92.8 per cent, with a tax outgo of Rs 1,350 crore, against Rs 700 crore YTD.
