Tax payments by companies fell for the first time in seven quarters

New Delhi: Tax payments by listed companies have declined by 7% year-on-year in the second quarter July-September of the current financial year. This is the worst performance in four years and the first time tax payments have declined in seven quarters. The last decline in corporate tax was recorded in Q3FY23, when tax payments declined by 0.7%.

The total corporate tax payment of 3,515 companies fell to Rs 1.09 lakh crore in July-September 2024 from about Rs 1.18 lakh crore in the same quarter last fiscal. There was also a 3% quarterly decline in July-September 2025. The reduction in tax payments is mainly due to the reduction in the effective tax rate.

According to data from the Comptroller General of Accounts, the government’s net corporate tax collection fell 8.3% to Rs 2.87 lakh crore in the second quarter July-September of the current fiscal year from Rs 3.13 lakh crore in the same period last fiscal.

Listed companies contributed 38.3% to the total corporate tax collection in the July-September second quarter of the current financial year, compared to 37.7% in the July-September second quarter of the last financial year. The contribution of these companies was 47.4% in the total corporate tax collection of Rs 9.11 lakh crore in the financial year 2024.

In the Union Budget for FY 2025 presented in July this year, the government has set a target of 12% more than the revised estimate of Rs 9.11 lakh crore in FY 2024. The government’s target is corporate tax collection of Rs 10.2 lakh crore in FY 2025.

The decline in tax payments by listed companies will put pressure on overall tax revenues. This may change the financial calculations of the government and the government will have to rely more on indirect taxes like excise duty, customs duty and GST as well as non-tax revenues.

The government’s tax collection grew by 3.8% in the second quarter July-September of the current financial year, with indirect taxes (such as excise duty, customs duty and GST) playing a major role. Indirect taxes increased by 11.9% year-on-year, while personal income taxes increased by 6.7%.