At its annual general meeting on July 15, the chairman and managing director of Reliance Industries Ltd (RIL), Mukesh Ambani, said that RIL is one of the highest taxable companies in India. This announcement was also featured in his speech to shareholders at previous AGMs. But what is the total share of taxes that the company pays to the public treasury?
The company’s income tax (or corporation tax) bill contributed 1.7 to 1.8 percent from FY16 to FY19 to the treasury. This is despite an increase of almost 24% in the company’s income tax bill in FY19.
However, in FY20, the proportion of RIL’s income tax in India’s computer collections (revised budget estimates of 610,500 crore) dropped by almost 30 basis points to 1 , 4%. This was due to a 30% decrease in RIL’s income tax expense during the year, caused by stable growth in consolidated net profit at 39,880 crore due to certain one-time expense items during the year. for the quarter ended March 31, 2020.
In terms of indirect taxes, the company’s contribution to customs and excise has continued to increase during fiscal years 2016 to 19. Its contribution to the collection of customs and excise duties has increased from 4.8 percent of total government collections of 4.98,411 crore in fiscal year 16 to 7.5 percent of total collections of 3.49,794 crore in fiscal year 19. But this proportion has declined by nearly 170 basis points in fiscal year 20 to stand at 5.8%. The thing to note here is that the GST was introduced on July 1, 2017.
In terms of contribution to the GST and the value added tax, knowing the proportion of the contribution to the fund of the Center becomes a little difficult. This is because VAT is only collected by state governments on certain products identified as petroleum products, which are among the main products sold by RIL.
Even though we use FY18 GST and VAT data and compare it only to the GST collected by the Center, this proportion has increased from 9.6% of total GST collections (including taxes) of the Center during the fiscal year 18 to 4,421,561 crore from ₹ to 11.6 per cent of GST collections (including cess) of ₹ 6,12,327 crore in 2018-19. Like income tax and customs and excise, the proportion fell by 30 basis points in FY20 to 11.3%.