Advance tax collections by corporates, other firms and individuals rose 20.6% on year in the second quarter of the current fiscal year to Rs 2.87 lakh crore, as per latest data, indicating that an earnings slowdown in the first quarter hasn’t dented India Inc’s confidence in likely profitability levels through the current fiscal year.
The year-on-year growth in advance taxes collected by the government was marginally higher in Q1 at 27.4%.
By September 17, corporates paid advance taxes to the tune of Rs 2.18 lakh crore for Q2FY25, up 16% on year.
Advance tax paid by personal income taxpayers rose at a higher rate of 37% to Rs 69,886 crore in the quarter. This is in line with a trend seen in recent years, with shift of tax burden away from corporates to individuals. The Budget decisions on capital gains tax too have seemingly reinforced this.
Typically, 15% of the advance taxes are paid in Q1, 30% each in Q2 and Q3, and 25% in the final quarter of a fiscal year.
The Centre’s direct tax collection collections, net of refunds, rose 16% on year to Rs 9.96 lakh crore till September 17 of the current financial year, according to official data. This amounted to 45% of the FY25 target of Rs 22.07 lakh crore. The required rate of growth for meeting the annual target is 12.8%.
The growth in Q2 advance tax receipts appears to be robust, given that it came in on a strong base (24%). Advance tax collections are termed to be an indicator of corporate profitability and rise in individual income.
Gross direct tax collections, before refunds, stood at Rs 12 lakh crore till September 17 of FY25, up 21.5% on the year. Direct tax refunds rose 57% on year to Rs 2.05 lakh crore till September 17 of the current financial year.