In a further sign of economic recovery, advance corporate tax collections for the October-December 2020 quarter have been higher than the same period last year, Moneycontrol has learnt from senior government sources. This even as net direct tax collections have fallen 13 percent till December 15.
Advance corporate tax collection in the October-December quarter of the current fiscal year rose 49 percent, sources said.
“Part of jump in advance corporate tax this time has been because corporate tax rates were cut in the third quarter last year. But overall the collections look good and are a sign of healthier corporate earnings and increased industrial activity,” said a finance ministry official.
However, the advance personal income tax for the third quarter dropped 5.6 percent year-on-year as the economy is trying to recover from the COVID-induced recession.
Moneycontrol had reported on December 16 that net direct tax collections for 2020-21 till December 15 had dropped 17.6 percent compared to the same period last year. This estimation was based on initial data that the Revenue Department had received from the banks.
However, with more data coming in from various banks and income tax offices, that number has been revised upwards to a 13 percent drop. The tax department received the third installment of advance tax on December 15.
Advance corporate tax paid in the third quarter rose to Rs 1.09 lakh crore against Rs 73,126 crore paid in the same quarter a year ago. Advance personal income tax paid in the third quarter fell to Rs 31,054 crore, against Rs 32,910 crore in the same period a year ago.
However, for the entire year till December 15, corporate advance tax is still down 4.9 percent year-on-year, while advance personal income tax collections are down 10.4 percent.
Gross direct tax collection fell Rs 7.33 lakh crore to date, against Rs 8.34 lakh crore in the same period last year, a fall of 12.1 percent. Net tax collection came in at Rs 5.87 lakh crore, against Rs 6.75 lakh crore in the same period a year ago, a drop of 13 percent.
On the other hand, growth in refunds showed a drop of 8.1 percent compared with that in the same period last year.
The government had reduced the corporation tax rate for existing and newly incorporated companies to 25 percent and 15 percent, respectively, last year, after the September 15 deadline for advance tax payment was over.
According to government data released in October, fiscal deficit rose to Rs 9.14 lakh crore, about 114.8 percent of the annual budget estimate, during the first six months of the current financial year, mainly on account of poor revenue realisation.