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Advance corporate tax mop-up jumps 49%, personal I-T falls

The rise in advance corporate tax payments has come mainly on the back of a low base effect due to lower advance tax paid by companies in December last year following a cut in the corporate tax rate announced in September 2019.

By: ENS Economic Bureau | New Delhi | December 18, 2020 3:00:03 am
Individual and corporate taxpayers are required to pay advance tax in four instalments.

Advance corporate tax collections rose by 49 per cent, while advance personal income tax declined by 5.6 per cent in the third installment of advance taxes that were due on December 15, a tax official said. The rise in advance corporate tax payments has come mainly on the back of a low base effect due to lower advance tax paid by companies in December last year following a cut in the corporate tax rate announced in September 2019.

Individual and corporate taxpayers are required to pay advance tax in four instalments. By June 15, they are required to pay 15 per cent of their tax liability, 45 per cent by September 15 and then 30 per cent and 25 per cent of their liability in the next two installments due December 15 and March 15, respectively.

“The improvement is mainly due to low base though there has been pickup from advance tax payments from some companies, information technology enabled services are doing well,” the official said.

Cumulatively, corporate tax collections so far have been recorded at Rs 2.39 lakh crore, down 4.9 per cent from last year, while personal income tax collections are down 10.4 per cent at Rs 60,491 crore, reflecting the impact of slump in economic activity in the aftermath of the Covid-19 pandemic.

During October-December, gross tax collection stood at Rs 7.3 lakh crore, down 12 per cent, while net direct tax collections were down 13 per cent year-on-year at Rs 5.8 lakh crore. Refunds were down over 8 per cent during the the third quarter at Rs 1.5 lakh crore.

The government in September last year had announced a cut in the corporate tax rate, wherein corporate tax for existing companies was reduced to 22 per cent from 30 per cent, and to 15 per cent from 25 per cent for new manufacturing firms incorporated after October 1, 2019, and starting operations before March 31, 2023.

As per latest government data, released for April-October, gross tax collections were at Rs 8.75 lakh crore, down 16.7 per cent from the same period last year.

For 2020-21, the government had set a target of Rs 6.81 lakh crore from corporate tax, Rs 6.38 lakh crore from income tax and security transaction tax. The growth rate for total direct tax collections for 2020-21 had been pegged at 12.7 per cent, which had later risen to nearly 28 per cent from the actual collections in 2019-20.

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