Advance tax mopup rises 10.44% in December

NEW DELHI: Indian companies and individuals paid Rs 78,226 crore in third installment of advance tax in December, 10.44% increase over last year, suggesting some pick up in the economy is the third quarter of the current financial year.

Advance tax collection are up 7.5% in the first nine months of the financial.

The rise in advance tax collections is in sync with the 8.2% rise in industrial production, suggesting some recovery in the economy that is headed for a decade low growth rate in the current financial year having expanded only 5.4% in the first half.

"There are reasons to believe that slowdown has bottomed out and the economy is headed towards higher growth in the second half of 2012-13," the mid-year economic analysis, tabled by the finance ministry in the Parliament, said.

Advance tax is paid in four installments -- June, September, December and March – that is adjusted against the final tax liability computed at the end of the year.

Advance tax payment by corporate are up only 7% in the financial year so far, suggesting that profit growth for companies continues to be muted. Payments by individuals were up 12.3% in the year so far.

However, the government sees evasion as also one of the factors responsible for subdued advance tax collections and has even issued a stern warning to taxpayers earlier this month to either disclose their correct income and pay advance tax by December 15 or be prepared to face action.

"Government would urge all assesses to disclose their true income. There is no advantage in suppressing the true income or avoiding paying income tax that is due", revenue secretary Sumit Bose had said.

The direct tax collection during April-November worked out to Rs 3.25 lakh crore, showing an increase of 7.14% as against the annual growth target of 15%. The government proposes to collect in the current fiscal Rs 5.70 lakh crore from direct taxes, which include income tax, corporate tax and wealth tax.