Advance tax mop-up falls 25.5% in Q2, led by plunge in corporate tax: Source
Mumbai: Advance tax collection fell 25.5 per cent to Rs 1,59,057 crore in the second quarter of the fiscal, an income tax official said on Thursday.
However, there was improvement over the first quarter ended June, when advance tax revenue had plunged 76 per cent to a tepid Rs 11,714 crore as the whole economy was under a stringent lockdown.
During the year-ago period to September 15, 2019, total advance tax collection had stood at Rs 2,12,889 crore, down from Rs 3,70,652 crore a year ago.
“Total advance tax collection in the second quarter fell by 25.5 per cent to Rs 1,59,057 crore from Rs 2,12,889 crore y-o-y. While corporates paid only Rs 1,29,619.6 crore in advance tax, down by 27.3 per cent in the reporting quarter, personal income tax collection stood at Rs 29,437.5 crore, down 15 per cent from Rs 34,632.9 crore.
“However, TDS (tax deducted at source) fared better at Rs 1,38,605.2 crore, down by 5.6 per cent from Rs 1,46,792.4 crore,” a senior income tax official from the Mumbai zone told PTI.
As against this, advance corporate tax mop-up had plummeted by 79 per cent to Rs 8,286 crore in the June quarter, from Rs 39,405 crore in the June 2019 quarter.
Advance personal income tax collection in Q1 had declined 64 per cent to Rs 3,428 crore from Rs 9,512 crore in the year-ago period, the official said.
September 15 was the last day to pay advance taxes, which is staggered across the four quarters of the fiscal year.
Companies and individuals pay 15 per cent of their evaluated tax liability in the first quarter, 25 per cent each in the next two quarters and the remaining 35 per cent in the fourth quarter.
The budget 2020-21 estimated a 12 per cent spike in gross tax collections to Rs 24.23 lakh crore, from Rs 21.63 lakh crore in FY20. The collection was lower in the last fiscal due to corporate tax cuts.
Of this, the budget target for direct taxes is Rs 13.19 lakh crore, which is 28 per cent higher than Rs 10.28 lakh crore in FY20, as the government expects a good response to the tax dispute settlement scheme ‘Vivad se Vishwas’.
Meanwhile, the tax official said total corporate tax collection till September 16 declined by 24.3 per cent to Rs 3,17,571.1 crore, while total personal income tax mop-up fell 15 per cent to Rs 2,18,856.6 crore.
Net tax collections till September 16 stood at Rs 3,28,133.2 crore, down 25.5 per cent from Rs 4,40,187.3 crore. Gross tax mop-up so far this fiscal stands at Rs 4,33,804.6 crore, down by 20 per cent from Rs 5,41,972.8 crore earlier, the official said.
During the year, the department refunded Rs 1,01,785.5 crore to taxpayers, which is 3.8 per cent less compared to the same period last fiscal when the refunds stood at Rs 1,05,671.4 crore.
Economists said the tax numbers are reflective of the tepid recovery and that the sequential improvement was expected.
During the June quarter, net tax collection had fallen by a steeper 31 per cent to Rs 1,37,825 crore, driven down by a massive 76 per cent plunge in advance tax mop-up.
The other two components of the tax revenues are securities transaction tax, which from Mumbai alone jumped to Rs 7,078.9 crore from Rs 5,035.3 crore a year ago, and the equalisation levy that inched up from Rs 487 crore last year to Rs 504.4 crore this year, the officer said.
Aditi Nayar, chief economist at ratings agency Icra, told PTI that tax collection trend reflects the trends in many other macro-indicators, and that the pace of contraction will come down going forward.
Similarly, Devendra Kumar Pant, chief economist at India Ratings, said sequential improvement in tax mop-up is reflective of the overall pick up in economic activities and is on expected lines.
“The pace of contraction in tax collection will come down going forward even though we expect GDP to contract by 11.5 per cent this fiscal.
“Tax numbers may correct to the upside by a few percentage points more. For the full year, we see the numbers improving from -31 per cent in Q1 to -22.5 per cent in Q2 and further to -17-18 per cent in Q3, and the year closing with a gap of 12-15 per cent,” Pant told PTI.
While total collection is short 25.5 per cent nationally, this is led by a full 14 per cent contraction from Mumbai, the largest tax zone contributing to over a third of the national collections. Total mop-up from the financial capital fell to Rs 74,789 crore, lower by 14 per cent.
Among other major tax zones, Bengaluru is the only zone which saw growth, clipping at 9.9 per cent. The tech capital contributed Rs 40,665.3 crore to the national tax kitty, up from Rs 36,986 crore, while Kochi has reported the worst collection with a massive 49 per cent plunge at Rs 3,214.7 crore.
The Delhi zone, the second largest tax base, saw a full 33 per cent decline at Rs 33,176.7 crore from Rs 49,545.8 crore during the reporting period.