Helped by a 77% rise in advance tax payments by corporates for the April-June quarter, net direct tax collection stood at R59,136 crore by mid-June, up 1.3% over the corresponding period last year. Until the advance taxes were in, the growth in net direct tax collection remained negative, owing to huge refunds made in the initial two months.
According to official sources, tax refunds increased 191% during the period up to June 16 as income-tax department decided to clear its backlog. The refunds so far this year have been over R40,500 crore, compared with R13,908 crore in the corresponding period last year.
?Advance tax for corporates has grown 76.8% and TDS for corporates has grown 32.2%. Overall gross growth for corporate tax is 45.3%. All this has helped,? a government official told FE.
Till June 16, gross direct tax collection stood at R99,707 crore, which is an increase of 38% as compared to same period last year.
?Corporate profitability is expected to come under pressure in the coming months on account of increase in the cost of borrowing and escalation in raw material prices. I don’t expect this momentum of corporate tax collections to continue,? said Ernst & Young tax partner Sudhir Kapadia.
During April-May this year, net direct tax collections fell 47.93%, mainly on account of large refunds by the tax department. Net direct tax collection stood at Rs 12,954 crore during the first two months.
Notwithstanding the drop in factory output growth in April, advance tax payments by top 100 corporates in the Mumbai region have increased by 14% for the June quarter on good collections from the banking and financial sector, surprising even many in the government circles. Overall, top 100 companies in the country paid 12% more advance tax in this quarter.