Advance tax collections in the third quarter rose 16.8% from a year earlier to ₹3.14 lakh crore, which economists see as a likely indication of the economy shrugging off the downturn blues triggered by weak growth in the previous three months.
Advance tax collections for the current financial year until December 15 totalled ₹7.5 lakh crore, up 20.19% from a year earlier. The figure comprises corporate advance tax of ₹5.60 lakh crore and personal income tax of ₹1.91 lakh crore.
The data take into account payments made till 11:30 pm on December 15, the last day for paying advance tax for the third quarter, and the final figure may marginally vary following settlement of transfer from banks, said an official.
Advance tax is paid in four instalments in June, September, December and March. It is based on the taxpayers' assessment of projected income and provides an indication of the corporate sector's performance in the months ahead.
Typically, 15% of the tax liability is paid in June, 45% by September, 75% by December and the remaining by March.
Economists said the economy may have turned the corner after posting the slowest growth in seven quarters at 5.4% in the July-September period. The second-quarter reading had raised concerns about a slowdown and many private economists and multilateral institutions had slashed their projections for fiscal 2025.
"High frequency data does point to a turnaround in GDP growth in the ongoing quarter," ICRA chief economist Aditi Nayar said. "We expect the 5.4% GDP growth in Q2 to represent a trough."
Meanwhile, direct tax collections, net of refunds, rose 14% to ₹15.78 lakh crore till December 15. These included corporate tax of ₹7.42 lakh crore, personal income tax of ₹7.93 lakh crore and security transaction tax of ₹40,113 crore.
Net collections grew at a healthy pace despite the department issuing ₹3.35 lakh crore of refunds, 48.8% more than a year earlier. "While advance tax growth has been quite robust, refunds have dampened the overall Y-o-Y rise in direct tax collections," Nayar said. The Centre had budgeted ₹20.1 lakh crore for direct tax collections for the fiscal year, including ₹10.20 lakh crore of corporate tax and ₹11.87 lakh crore of personal income tax.
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