Taxation
How 15,080 profitable firms paid no tax in 2015-16
Tax incentives allowed 15,080 profit-making companies to have effective tax rates of zero, and in some cases less than zero, in 2015-16, according to an IndiaSpend analysis of the latest available national tax data or, more specifically, a government analysis called the Revenue Impact of Tax Incentives under the Central Tax System.
 
The central government introduced minimum alternate tax (MAT) in the late 1980s to tackle this anomaly, but even MAT has exemptions that appear to have negated its original intent partially: 52,911 companies made profits in 2014-15 and paid no tax.
 
Larger corporates paid lower tax rates than smaller ones for 2015-16.
 
Effective tax rate is the tax rate actually paid by companies on profits, calculated as tax actually paid divided by profits before tax. While effective tax rates rose between 2012-13 and 2015-16, many exemptions remain, especially for larger companies.
 
For instance, corporates have a statutory tax rate of 34.47 per cent, which they must pay on profits. The effective tax rate in 2015-16 was 28.24 per cent, higher than it was in 2014-15 (24.67 per cent).
 
The effective tax rate for a company making a profit up to Rs 1 crore was 30.26 per cent in 2015-16 while the corporate tax rate was 25.90 per cent for those with profits greater than Rs 500 crore.
 
This means companies making smaller profits are competing in an unequal environment against bigger companies with substantial taxation benefits even though the gap in effective tax rates has been narrowing over the years.
 
The effective tax rates of the lowest paying industries (cement, sugar, financial leasing companies), which were in single digits in 2014-15, have increased substantially and all are touching nearly 20 per cent.
 
These sectors, however, continue to be taxed at lower rates than other industries are.
 
There are interesting contrasts on tax rates of different industries in the same sector:
 
1. Banking companies paid tax at 40.3 per cent while share brokers/sub-brokers paid tax at 25.1 per cent (both financial services).
2. Courier agencies paid tax at 41.7 per cent compared to transporters who paid tax at 26.4 per cent (both services).
3. Forest contractors paid tax at 37.6 per cent while mining contractors paid tax at 28.2 per cent (both contractors).
4. Drugs and pharmaceuticals paid tax at 24.2 per cent, while electronics paid tax at 35.5 per cent (both manufacturing).
 
"The plan for phasing out of exemptions will kick in from April 1, 2017," Finance Minister Arun Jaitley said in his 2017-18 budget speech.
 
The government provided the corporate sector Rs 76,857.7 crore in tax breaks or exemptions in 2015-16.
 
The biggest tax exemption is the deduction on expenditure for scientific research (including for seeds and other biotech purposes), which allows for exemption which is twice the expenditure incurred and export profits of units in special economic zones (SEZs).
 
The government also provided customs duty exemption of Rs 69,259 crore and Rs 79,183 crore for excise duty in 2015-16.
 
As many as 43 per cent of companies made losses, three per cent companies made no profit and 47.7 per cent of companies made profits up to Rs 1 crore in 2015-16.
 
About six per cent of companies recorded profits in excess of Rs 1 crore, according to the tax data.
 
Contribution by corporates to political parties shows variance compared to reporting by political parties to the
Election Commission for 2015-16.
 
The deductions granted on account of contribution by corporates to political parties has declined from Rs 112 crore in 2014-15 to Rs 14 crore in 2015-16, according to tax data.
 
This is in contrast to the data submitted by parties to the Election Commission.
 
Donations received by political parties in excess of Rs 20,000 was Rs 576 crore in 2014-15 and Rs 77.3 crore in 2015-16, according to data from Association for Democratic Reforms, an advocacy.
 
One possible explanation for the variance could be under-reporting by corporates.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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RBI issues new batch of Rs500 notes
The Reserve Bank of India has issued a new batch of Rs 500 denomination notes, an official said here on Tuesday.
 
"In continuation of issuing of Rs 500 denomination banknotes in Mahatma Gandhi (new) series from time to time which are currently legal tender, a new batch of banknotes with inset letter "A" in both the number panels, bearing the signature of Urjit R. Patel, Governor, Reserve Bank of India; with the year of printing '2017' on the reverse, are being issued," an official statement said.
 
The design of these notes is similar in all respects to the Rs 500 banknotes in Mahatma Gandhi (New) Series, which were notified on November 8, 2016.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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CBI arrests Abhijeet Group promoters, bank official in fraud case
The CBI on Tuesday said it has arrested Abhijeet Group promoters -- Manoj Jayaswal and Abhishek Jayaswal -- and a former Canara Bank Deputy General Manager T.L. Pai on the charge of causing loss of over Rs 290 crore to two banks through fraud.
 
According to the CBI, the accused caused loss of Rs 218.85 crore to Canara Bank and Rs 71.92 crore to Vijaya Bank.
 
The Central Bureau of Investigation (CBI) said its probe revealed a large-scale scam in which 13 companies of the Abhijeet Group raised loans from over 20 banks and other financial institutions, which turned into non-performing assets (NPAs) since 2014 and led to outstanding loans of Rs 11,000 crore.
 
The arrests were made in a case registered by the agency in 2015 on a complaint by the two public sector banks that the accused perpetrated a fraud of Rs 290.77 crore through criminal conspiracy and cheating. 
 
The group promoters were arrested from Kolkata. 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

GLN Prasad

2 weeks ago

One can understand, if the person cheated one bank and bribed official, but how that is possible to cheat more than 15 banks ? A case registered in 2015, arrests were made in 2017. A common man fails to understand as to why and how the systems, with high reputation in Banks are failing inspite of periodical inspection by RBI.

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