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New Delhi: it also depends on how far companies have deferred their advance tax payments in view of the ongoing liquidity crunch,” said Amitabh Singh, tax partner, Ernst and Young.
Mukesh Ambani-led Reliance Industries Ltd also witnessed a decline in its advance tax payment. For the quarter ending December 15, 2008, RIL deposited Rs 450 crore in sharp variance to the Rs 1,045 crore it deposited a year ago. In the previous two installments in 2008, the company paid Rs 1,023 crore as advance tax.
Expecting a decline in their profits, others such as Steel Authority of India Ltd (SAIL) also paid lesser in the third instalment. SAIL paid Rs 751 crore as advance tax in the third instalment this year as compared to 1,130 crore it paid a year ago. Advance tax is considered a key indicator of a company’s expected performance over a year as it is based on its projected earnings. Although companies pay advance tax in four parts, the December 15 installment is considered crucial, as 75% of the total advance tax for the fiscal is paid by then.
Incidentally, direct tax collections till December 24 this fiscal are up 11.5% at Rs 2,32,000 crore from Rs 2,08,000 crore in the same period last year.
With indirect tax collections already slowing down, direct tax receipts were expected to be a significant source of revenue for the government, which is looking for some fiscal headroom as it works out a fresh stimulus package to rev up economic growth. The Centre’s fiscal deficit is now expected to touch 5% of the GDP for 2008-09, double of what was estimated at the time of the Budget....
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