Advance tax payments by 17 top firms based in Mumbai, Indias financial capital, rose by 20% for the three months ending September, though corporate profits are moderating and industrial growth is faltering.
Another 83 firms are expected to pay their advance taxes by the 15 September deadline, two income tax officials said, both requesting anonymity.

The early estimates of advance tax numbers are showing a 20% increase, but this is likely to come down around 10-15% when remaining firms pay taxes tomorrow, said one of them.

Hindustan Unilever Ltd, Life Insurance Corp. of India, HDFC Bank Ltd and ICICI Bank Ltd are among the firms that paid advance taxes on Friday. Reliance Industries Ltd (RIL), Tata Group companies and State Bank of India are expected to pay on Saturday.

Indian companies pay income tax every quarter on their projected earnings and these figures are used as a proxy for financial performance estimates, though the correlation of earnings with tax paid has been mixed.
Going by norms laid down by the Income-tax Act, firms are required to pay 15% of their total advance tax in the first quarter, followed by 30%, 30% and 25% in the next three quarters, respectively.

Advance tax numbers for the July-September second quarter are critical as Indias headline inflation shot up to 7.55% in August from 6.87% in July. The rising inflation rate and faltering industrial growth may further complicate choices for the central bank ahead of its mid-quarter monetary policy review on Monday. On Thursday, the government increased diesel prices by Rs.5 a litre, revised the excise rates on petroleum products and put a cap of six cylinders per household on subsidized cooking gas.

Life Insurance Corp. paid Rs.1,300 crore as advance tax for the September quarter against Rs.1,165 crore in the year-ago period, while ICICI Bank paid Rs.815 crore against Rs.650 crore a year ago. HDFC Bank paid Rs.1,100 crore against Rs.800 crore while Hongkong and Shanghai Banking Corp. Ltd paid Rs.500 crore against Rs.460 crore. Traditionally, State Bank of India, the nations largest lender, has been the highest taxpayer in the Mumbai circle and RIL, Indias top firm by market value, the second-highest.

Saurabh Mukherjea, head of equities at financial services firm Ambit Capital Pvt. Ltd, said there was no correlation between advance tax numbers and the state of the economy. The advance tax number are driven by variety of other factors. However, starting second half of the current fiscal, we feel that the economy will have meaningful growth compared to the first half, he said.

Gross direct tax collections in April-August increased 6.51% from a year ago to about Rs.1.64 trillion, according to the finance ministry. Gross collection of corporate taxes increased 0.15% to Rs.96,738 crore, and gross collection of personal income tax rose 17.09% to Rs.67,420 crore. Net direct tax collections rose 28.15% to about Rs.1.24 trillion.