Q4 Sees Muted Growth In Corporate Advance Tax, But Net Tax Collections Surge 13%

Advance tax collections, primarily driven by corporates, showed subdued growth in the fourth quarter of the current financial year, with overall collections rising just 0.88%, according to tax department data released on Monday.

Corporate advance tax payments increased a modest 2% year-on-year. However, net direct tax collections surged 13%, reaching Rs 21.3 lakh crore, closing in on the full-year target of Rs 22.37 lakh crore for the fiscal ending March 31.

This sluggish growth in corporate advance tax payments contrasts with the strong overall performance seen in the first three quarters of the fiscal. Muted growth is aligned with the gross-domestic-product growth and certain tax deductions given to corporates to boost investment, a tax official told NDTV Profit.

Cumulative advance tax collections, which include both corporate and non-corporate taxes, grew 14.6% to reach Rs 10.45 lakh crore as of March 16. 

However, the growth rate for corporate advance tax collections has slowed considerably when compared to the previous quarter. Till mid-March, corporate advance tax collections had grown 12.5%, a significant slowdown from the 16.71% growth observed by mid-December.

In Q4, the growth rate for advance tax collections from corporates remained relatively low at 2.03%. This slower growth could be indicative of a cautious outlook among corporate taxpayers or could reflect broader economic conditions, according to experts.

Despite this, the overall gross tax collections have shown strong performance, rising 16.2% YoY to reach Rs 25.9 lakh crore on a gross basis.

On a net basis, after adjusting refunds, the collection has increased 13%, totaling Rs 21.3 lakh crore, as compared to the same period last year. This includes net corporate collection of Rs 9.69 lakh crore and non-corporate collection of Rs 11.01 lakh.

The digital analysis is helping the department in increased compliance in personal income tax, which is showing double-digit growth in collections, the official said on the condition of anonymity.

Despite the slower growth in the fourth quarter, the tax department is still on track to meet its target and may exceed the estimates, experts said.

As of now, the outlook remains positive, with tax collections continuing to show healthy growth despite the challenges faced by the corporate sector in the latter part of the fiscal year, they added.