Tax mop-up from MNCs to cross Rs 15K cr mark
Tax collection from MNCs operating in India is set to cross Rs 15K cr mark by the end of the fiscal, 25% more than the projected figure. Weekend platter I ULIP: Tax saver
By M Padmakshan, TNN |
MUMBAI: The tax collection from multinational companies (MNCs) operating in India is set to cross the Rs 15,000-crore mark by the end of the fiscal, 25% more than the projected figure of Rs 12,000 crore, according to sources in the income-tax (I-T) department. Nearly 3,000 MNCs operate in the country.
Actually, the figure could be much more if one adds the possible collection from the recent cross-border mergers and acquisitions the MNCs completed in India, including the Hutch-Essar deal from which the department expects to generate $2 billion (nearly Rs 8,000 crore) from Vodafone.
The British telecom giant last year acquired a 67% stake in Hutch-Essar for $11 billion cash. The Mumbai division of the international tax wing of the income-tax tax department, which accounts for over 50% of the tax collection from the MNCs in the country, is expected to collect a record figure of Rs 9,000 crore this year. This is an excess Rs 2,000 crore over the projected tax collection of Rs 7,000 crore.
One of the reasons for the robust tax collection is the enhanced transparency in the operations of MNCs in India. The I-T department has also carried out surveys on a number of foreign banks, diamond companies and sought answers for anomalies in recording their transactions.
The department last year levied an additional tax of over Rs 1,000 crore on the MNCs on the basis of their tax returns. Of this, a major chunk was from the foreign banks in India, apparently the biggest beneficiaries of the buoyancy in the economy. Therefore, most of the MNCs, thanks to such actions, have decided to opt for complying with the laws of the land rather than circumventing it.
Another compelling factor is the strict transfer pricing rules that were put in place since 2001. However, the most obvious reason is the buoyancy in the Indian economy and the widening profit margins.
Actually, the figure could be much more if one adds the possible collection from the recent cross-border mergers and acquisitions the MNCs completed in India, including the Hutch-Essar deal from which the department expects to generate $2 billion (nearly Rs 8,000 crore) from Vodafone.
The British telecom giant last year acquired a 67% stake in Hutch-Essar for $11 billion cash. The Mumbai division of the international tax wing of the income-tax tax department, which accounts for over 50% of the tax collection from the MNCs in the country, is expected to collect a record figure of Rs 9,000 crore this year. This is an excess Rs 2,000 crore over the projected tax collection of Rs 7,000 crore.
One of the reasons for the robust tax collection is the enhanced transparency in the operations of MNCs in India. The I-T department has also carried out surveys on a number of foreign banks, diamond companies and sought answers for anomalies in recording their transactions.
The department last year levied an additional tax of over Rs 1,000 crore on the MNCs on the basis of their tax returns. Of this, a major chunk was from the foreign banks in India, apparently the biggest beneficiaries of the buoyancy in the economy. Therefore, most of the MNCs, thanks to such actions, have decided to opt for complying with the laws of the land rather than circumventing it.
Another compelling factor is the strict transfer pricing rules that were put in place since 2001. However, the most obvious reason is the buoyancy in the Indian economy and the widening profit margins.
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Sources said this year too, foreign banks are going to top the list of the largest tax paying MNCs in the country. Last year the chart-toppers were Standard Chartered Bank, HSBC, Bank of America with their payment ranging from Rs 500 crore to Rs 800 crore.
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