Q3 corporate advance tax up 49% signals robust earnings

Shishir Sinha New Delhi | Updated on December 17, 2020 Published on December 17, 2020

Overall direct tax collection gap has now shrunk to 13%

Advance tax collections from companies for the December 15 instalment has recorded a growth of 49 per cent indicating prospects of better corporate earnings. This has improved overall direct tax collections, where the dip is just 13 per cent now as against 22 per cent in the beginning of November.

However, advance tax collections under personal income tax is in the negative zone.

According to Government sources, after reconciliation of bank data, advance tax collection under corporate tax was ₹1.09 lakh crore for third instalment as against ₹73,126 crore in corresponding instalment of FY20. “Last fiscal, corporate tax rates were slashed which affected collection for December 15 instalment. This could be one reason for jump this fiscal,” a senior government official told BusinessLine. Still, he emphasised that the present number shows a recovery sign for corporate earnings.

However, the sum of all the three instalments of advance tax under corporate tax is still in the negative zone.


The last date of third instalment under direct tax was December 15. According to Section 208 of the Income Tax Act, any assessees, barring those above the age of 60 not running any business, having estimated TDS (Tax Deducted at Sources)/TCS (Tax Collected at Source) for the year as ₹10,000 or more, is required to pay his/her tax in advance, in the form of ‘advance tax’. This is required to be paid in four instalments (15 per cent of total by June 15, 45 per cent of total by September 15, 75 per cent of total by December 15 and entire amount by March 15).

In case of personal income tax, collection through third instalment of advance tax was ₹31,054 crore as against ₹ 32,910 crore showing a decline of 5.6 per cent. One possible reason for this could be loss of job and income since March for an individual. “Most of services/activities came to standstill, which affected income of individuals. Besides, there were cut in salaries and other benefits etc. All this affected advance tax collection under personal income tax,” the official explained.

Meanwhile, the good news is that the dip in overall direct tax collection has slowed down. Though there is a thinking in the government that target mentioned in the Budget of over ₹13 lakh crore may not be achieved, going by the current trend, the expectation is that final figure will be close to the target. At the same time, collections from GST are picking up with two successive months of over ₹1 lakh croregiving some comfort to the government on the fiscal front.

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Published on December 17, 2020
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