Reliance Group: How come only 3.1% of net profit was taxed?

Jagadeesh Tamilselvan 27 Jun 2021 87

For the financial year 2020-21 (March 2021), the total profit of Reliance Group was Rs 55,461 crore. Of that, Rs 5,642 crore is tax-free. The remaining 49,819 crore rupees is enough to pay taxes...

The annual general meeting of Reliance Group, India's largest private company, was recently concluded. Despite various announcements made at the meeting, Reliance Group paid just 3.1 per cent of its gross profit tax, which is now widely rumored on the internet.

 How is this possible for Reliance Group?

 Of the 49,819 crore rupees, 34.944 per cent account for 17,409 crore rupees in taxes.

 1. Of the Rs 17,409 crore to be paid by Reliance Group, Rs 14,882 crore is shown as MAT (Minimum Alternative tax) tax revenue. In short, the Matte tax can be considered as a prepaid tax. The pre-paid tax is deducted from the tax payable this year.

 2. As well as the previous loss of Rs 4,261 crore, have been deducted from taxes due this year.

 3. As a result, Reliance's subsidiaries, which are not required to pay taxes, have deducted Rs. 2,184 crore as variations in the amount paid at various tax rates.

 4. Some taxes paid before this go, also have tax deductions under the headings such as income tax deductible income. Expenditure on Rs 6,417 crore was not tax deductible.

 5. Reliance Industries, India's largest private company, pays only Rs 1,722 crore in taxes out of a total of Rs 55,461 crore. Proportionately, it pays tax on just 3.1 percent of gross profit.

 Source and data were obtained from Reliance Industries Group's 2020 - 21 Annual Report.

What do the experts say?

 It is noteworthy that Reliance Group has been doing a number of businesses in India such as crude oil refining, geo telecom service and Reliance Retail.

 So its accounting cases are put together. Therefore, experts say that it would be better to have clear financial statements, which is what investors expect.

 

 

 

 

 

read more at BBC India

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