No advance tax cheer for taxman; growth seen at 5-6%

Dark clouds of a slowdown are blocking out the sun and everyone is hunting for that silver lining. But if the taxman is to be believed, the advance tax numbers due tomorrow will not make the grade.

Manufacturing is expected to be the worst sector, and sources indicate the capital goods and metals space could also report lower advance tax numbers than last year, as could telecom, cement, and auto companies. Sources add that the Income Tax department is particularly worried about the financial services and mutual fund industry, given a large exposure to bearish financial markets.

But oil companies may come to the rescue. After three years of paying minimal or zero advance taxes, the taxman hopes receipt of subsidy payments from the government, lower crude oil prices, and recent price hikes will bolster their books this time around.

Private banks, and even insurance bellwether LIC is expected to report a higher advance tax payout.

Despite these bright spots, overall growth in the first installment of advance tax may not cross 5-6%.

Sources say Reliance Industries , one of the largest advance tax payers, is expected to pay just Rs 850 crores this year against Rs 900 crores last year. Software services exporter TCS ’ tax payout is likely to stay absolutely flat. Also, Union Bank and Bajaj Auto may report only a marginal improvement in payout.

The IT department has reason to be cautious because gross direct tax collections in April and May rose just 3.62% to Rs 52,232 crore. In this, the contribution of corporate taxes fell 2.82% to just Rs 24,329 crore. This makes the overall FY13 target of Rs 5.7 lakh crore a little tough to achieve.

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