Advance tax payment at 30%

The advance tax pay-out of Corporate India is estimated to have recorded a 30-per cent increase for the June 15 instalment on a year-on-year basis, going by the data available with the Revenue department.

For the June 15 instalment in 2007, the Income Tax department had mopped-up advance tax of about Rs 19,000-20,000 crore from the corporate sector.

ONGC continued to hold the top position in the Top Ten advance taxpayers’ league which has GAIL and BSNL as new entrants.

In 2007-08, while GAIL was placed in the 18th position in 2007-08, BSNL did not figure in the top 50 , according to sources in the Revenue department.
5-year period ends

BSNL’s advance tax pay-out for June 15 instalment this year stood at Rs 312 crore, nearly three times the Rs 105 crore paid in June last year. The main reason for increased advance tax pay-out is the expiry of Section 80-IA benefit last fiscal.

“Profitability is not the main issue. Tax incidence is there because Section 80-IA benefits expired last year. The five-year period has been completed. So we are paying more advance tax now. To be on the safer side and avoid penalties, we have in fact paid a little more to the tax department,” Mr S.D. Saxena, Director (Finance), BSNL, told Business Line.
PSEs dominate

The public sector dominance in the top ten advance taxpayers’ league continues even after some churn in the latest edition.

The private sector, which has started to expand its footprints abroad, had a somewhat subdued presence, with only three firms — Reliance Industries, Tata Steel and ICICI Bank — figuring in the Top Ten league.
Why subdued presence

One of the plausible reasons for such subdued presence of the private sector could be income-tax exemptions given for units in sectors such as information technology and telecom.

Analysts reckon that income-tax pay-outs of firms in these sectors may increase in the next few years after the termination of the sun-set clause specified period.

Reliance Industries and Tata Steel were the only private sector companies to figure in the top ten for 2007-08. In 2006-07, Tata Steel was the only private sector company to find a place in such a listing.

ICICI Bank, which did not find a place in the final list of top ten advance taxpayers’ for 2007-08, has returned to the top ten list in the June 15 instalment with an advance tax payment of Rs 340 crore (Rs 250 crore).
IOC’s burden

Indian Oil Corporation (IOC), which figured among the top five advance taxpayers’ in 2007-08, does not find a place in the list this year, mainly on account of its inability to undertake price adjustments following spurt in global crude oil prices.

Oil marketing companies such as IOC are facing the brunt of skyrocketing prices of crude oil as petroleum products such as auto fuels and cooking gas continue to be administered.

The other entities that have moved out of the Top Ten league in the June 15 instalment this fiscal are Bharat Heavy Electricals Ltd (BHEL) and National Thermal Power Corporation (NTPC).

While BHEL has paid advance tax of Rs 300 crore (Rs 210 crore) , NTPC pay-out has declined to Rs 188 crore (Rs 202 crore).

Corporates are required to fulfil their advance tax obligations in a financial year over four instalments — in June, September, December and March.

The Centre’s direct tax revenues have been robust this fiscal, with collections recording a 71.28 per cent increase during the first two months (April-May) to Rs 22,840 core as against Rs 13,335 crore in the same period last year.

The buoyancy in direct tax collections had prompted the Finance Minister, Mr P. Chidambaram, to advise the Central Board of Direct Taxes (CBDT) to revise upwards its collection targets for 2008-09. As against the Budget estimate of Rs 3,65,000 crore for 2008-09, the CBDT is now looking at a target of Rs 3,90,000 to 4,00,000 crore this fiscal.