Advance tax outgo affected by currency recall

Consumer goods, durables, automobiles worst hit.

Demonetisation has crippled the earnings of fast-moving consumer goods, durables and automobile companies.  

Companies like Hindustan Unilever and Asian Paints have told tax officials their sales took a beating due to the high-denomination note recall on November 8.

HUL on Thursday reported a decline of nearly 10 per cent in its advance tax outgo for the third quarter to Rs 560 crore from Rs 620 crore in the same period a year ago.

“Advance tax collections from top consumer goods companies are disappointing, as their sales seem to have been affected by demonetisation. They have communicated this with us,” an income-tax official said.

Advance tax is a system of staggered payment of income tax in four quarterly instalments and is considered an indicator of a company's performance in a given quarter.

Two-wheeler manufacturer Bajaj Auto’s advance tax outgo was down 17 per cent to Rs 575 crore, while Mahindra & Mahindra’s payment remained unchanged at Rs 300 crore.

Tata Steel’s advance tax payment was down over 11 per cent, year on year, and Tata Consultancy Services paid Rs 1,540 crore, against Rs 1,600 crore in the same quarter last year. 

A pick-up in global crude oil prices allowed Reliance Industries to increase its tax outgo by over 10 per cent to Rs 2,600 crore.

Cement major UltraTech paid Rs 220 crore as advance tax, down 12 per cent from the year-ago period. 

Life Insurance Corporation reported a sharp increase of 13 per cent in advance tax to Rs 2,235 crore in this quarter.

State Bank of India reported a 25.9 per cent decline in its advance tax payment to Rs 1,282 crore. ICICI Bank paid Rs 1,200 crore, 27 per cent less than in the same quarter a year ago. 

“Banks’ tax numbers are disappointing as they contribute a major part of government revenue,” said the tax official.

HDFC Bank’s advance tax outgo jumped 16 per cent, year on year, to Rs 2,300 crore and HDFC’s payment increased six per cent to Rs 810 crore.

State-owned Bank of Baroda and Central Bank paid 33 per cent and 17 per cent more, respectively. Citibank and Standard Chartered Bank paid Rs 710 crore and Rs 570 crore, respectively, as advance tax.