Rediff.com  » Business » Advance tax collection zooms nearly 33% to Rs 1.41 trillion in Dec quarter

Advance tax collection zooms nearly 33% to Rs 1.41 trillion in Dec quarter

By Dilasha Seth
December 18, 2020 12:57 IST
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The robust revenue collection reinforces hope of a good economic performance in the third quarter of financial year 2020-21 after the surprising pickup seen in Q2.

Tax

Illustration: Uttam Ghosh/Rediff.com

Indicating a sharp revival in direct tax mop-up, advance tax paid by companies in the December quarter rose by 50 per compared with the corresponding period last year, owing to a low base effect.

It also indicates that the optimism among corporate houses about their earnings as the economy gradually recovers from the pandemic-induced shock.

 

The robust revenue collection reinforces hope of a good economic performance in the third quarter of financial year 2020-21 (Q3FY21) after the surprising pickup seen in Q2.

At Rs 1.41 trillion, overall advance tax collection, including corporation and personal income tax, rose by 33 per cent in Q3.

In the April-December period, advance tax mop up stood at Rs 2.99 trillion, a six per cent decline year-on-year (YoY), compared with a 25 per cent contraction seen after the second installment in September.

This also helped narrow the contraction in net direct taxes to 13 per cent as on December 16, compared to a 25 per cent decline seen as on December 1.

Direct tax collection, net of refunds, stood at Rs 5.89 trillion, compared with Rs 6.75 trillion a year ago.

The collection is just 45 per cent of the target of Rs 13.19 trillion estimated in the Budget for 2020-21.

Gross collections are down 12 per cent to Rs 7.34 trillion and refunds are lower by nine per cent to Rs 1.45 trillion as of December 16.

Advance tax is paid in four installments — 15 per cent by June 15, another instalment by September 15 (30 per cent), third by December 15 (30 per cent), and the rest by March 15. It is considered an indicator of economic sentiment.

Corporation advance tax in Q3 stood at Rs 1.1 trillion, compared with Rs 73,000 crore collected a year ago, an almost 50 per cent rise.

Personal income tax advance collection was six per cent lower in Q3 at Rs 31,000 crore, compared with Rs 33,000 crore last year.

“While the robust growth in corporation advance tax can largely be attributed to the low base effect because of tax reduction in September last year, there are definitely signs of revival in economic activity and jobs, which will help sustain revenue mop up in the last quarter,” said a government official.

Corporation tax collection had declined by 5.2 per cent in Q3FY20 as companies adjusted their advance tax after the government cut tax rate from 25-30 per cent to 22 per cent for existing companies that do not avail of any exemptions, and 15 per cent for new companies, besides a reduction in minimum alternate tax from 18.5 per cent to 15 per cent.

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Dilasha Seth in New Delhi
Source: source
Related News: Q3FY21, Q3FY20
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