Listed companies accounted for a little less than a third of the corporate tax in FY18, down from nearly 40 percent in FY17 and 49 percent a decade ago, Business Standard reported.
India’s top companies listed in BSE500, BSE Mid-cap or BSE Small-cap index paid Rs 1.88 lakh crore in direct taxes in FY18, against total corporate tax receipts of Rs 5.71 lakh crore.
The findings are based on an analysis of listed companies that accounted for 84 percent and 93 percent of the combined net sales and net profits of all listed firms, respectively, in FY18.
The decline in tax outgo for listed companies was in line with the poor profitability as their pre-tax profits were down 9.6 percent YoY in FY18. Another reason could be an overall increase in the total corporate tax collections base, as per the report.
According to the income tax (I-T) Department, the total corporate tax collections grew at a compound annual growth rate (CAGR) of 9.9 percent to Rs 5.71 lakh crore in FY18 from Rs 3.56 lakh crore in FY13.
So while there was a 0.6 percent decline in the tax outgo of 868 listed companies in FY18, the total corporate tax receipts grew 17.8 percent on a year-on-year (YoY) basis. This increase in the total corporate tax collections stems from the growing tax corpus of the unlisted companies.
As per the data, the space of unlisted companies is now more than twice the universe of listed companies in terms of profits and tax contribution.
The direct tax outflow for the listed companies expanded at 5 percent CAGR to Rs 1.88 lakh crore in FY18 from Rs 1.4 lakh crore in FY13.
“Corporate earnings have generally been under pressure in the last few years either because of poor revenue growth or decline in corporate margins. This is what the income tax data capture,” Madan Sabnavis, Chief Economist, CARE Ratings told the paper.
Analysts, however, consider a steady rise in the effective corporate tax rate in recent years as the reason behind the decline in taxes paid by the listed companies.
“The corporate tax rates have risen in recent years forcing companies to pay a greater share of their pre-tax profit,” Dhananjay Sinha, Head, Research, Emkay Global Financial Services told the paper.