Advance tax Q3 mop-up down 22%

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New Delhi: Corporate advance tax collections dipped by 22.4% to Rs 42,600 crore in the quarter ending December 15, 2008, indicating that most companies are bracing for a drop in their profitability this year due to the global economic downturn adversely impacting India’s growth prospects. In sharp contrast, the third tranche of advance tax payments in 2007 saw a 30% rise yielding Rs 54,900 crore in revenue.

The drop in the third quarter collections has hit the exchequer’s overall advance tax collections—corporate advance taxes up till December 24 this year were 2.6% lower than last year at Rs 1,13,000 crore. But overall corporate tax receipts have not gone into the red, thanks to the robust collections from corporate tax deducted at source—tax inflows from India Inc grew by 15.3% to Rs 1,50,000 crore.

Even though it shelled out relatively lesser taxes in the third quarter, Oil and Natural Gas Corporation Ltd (ONGC) retained its position as the top advance tax payer. It paid Rs 1,732 crore in the third installment of advance tax, much lesser than the Rs 2,817 crore it paid a year ago. The sharp drop in international crude oil prices has meant the company’s December payment is much lesser than the Rs 3,736 crore it deposited in the first two tranches of this fiscal.

At the other end of the spectrum, Tata Steel was still among the top ten advance tax payers but registered the sharpest decline in advance tax payments. The company shelled out a mere Rs 250 crore in its third advance tax instalment this fiscal, a 66% decrease over the Rs 750 crore it paid a year ago.

In contrast till September 15 this year, the steel major paid a hefty Rs 1,445 crore.

Banks continued to pay healthy advance taxes. State Bank of India—the second highest advance tax payer—shelled out Rs 1,700 crore in the third tranche, much higher than the Rs 1,088 crore it paid for the quarter ending December 15 last fiscal. Similarly ICICI Bank paid Rs 625 crore in advance tax for the quarter ending December 15, as against the Rs 500 crore it deposited a year ago.