Companies

How much does RIL contribute to the government’s tax kitty?

Vivek Ananth BL Research Bureau | Updated on July 17, 2020 Published on July 16, 2020

While the contribution of its direct taxes has dipped to 1.4%, that of its indirect taxes has fallen to 5.8%

In its annual general meeting on July 15, Reliance Industries Ltd (RIL) Chairman and Managing Director Mukesh Ambani said RIL is amongst the highest tax paying corporate in India. This announcement has been a feature of his address to shareholders in previous AGMs, too. But what is the total proportion of taxes the company pays to the national exchequer?

Direct taxes

The company’s income-tax bill (or corporation tax) contributed a steady 1.7-1.8 per cent over FY16 to FY19 to the national exchequer. This is despite a near 24 per cent rise in the company’s income tax bill in FY19.

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However, in FY20, the proportion of RIL’s income-tax outgo to India’s IT collections (revised budget estimates of ₹6,10,500 crore) has fallen nearly 30 basis points to 1.4 per cent. This was due to a 30 per cent fall in RIL’s income tax outgo during the financial year, caused by a flat consolidated net profit growth to ₹39,880 crore due to some exceptional expense items in the quarter ended March 31, 2020.

 

Indirect taxes

In terms of indirect taxes, the company’s contribution to customs and excise has been steadily increasing over FY16 to FY19. Its contribution to customs and excise duty collections rose from 4.8 per cent of the government’s total collections of ₹4,98,411 crore in FY16 to 7.5 per cent of the total collections of ₹3,49,794 crore in FY19. But this proportion has fallen by nearly 170 basis points in FY20 to 5.8 per cent. The thing to note here is that GST was introduced on July 1, 2017.

 

In terms of contribution to GST and Value Added Tax, finding out the proportion to the contribution to the Centre’s kitty gets a bit difficult. This is because VAT is solely collected by State governments on certain identified products like petroleum products, which are some of the main products that RIL sells.

Even if we use GST and VAT data from FY18 and compare it solely with the GST collected by the Centre, this proportion rose from 9.6 per cent of the Centre’s total GST (including cess) collections in FY18 of ₹4,42,561 crore to 11.6 per cent of GST (including cess) collections of ₹6,12,327 crore in 2018-19. Similar to income tax and customs & excise, the proportion has fallen by 30 basis points in FY20 to 11.3 per cent.

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Published on July 16, 2020
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