Why Doesn't A Single Adani Group Company Feature Among India's Top Corporate Taxpayers?

Before the allegations of corporate fraud by Hindenburg Research rattled the Adani Group, Gautam Adani was among the world¡¯s richest people. From mining to green energy to shipping to aviation to power and others, his companies are spread across diverse sectors.

One might, therefore, expect Adani¡¯s companies, including his flagship Adani Enterprises in particular, to be among the top corporate taxpayers in India. But no Adani firm even features in the top 10.

Top Corporate Tax Payers In India

indiatimes

In 2022, Tata Consultancy Services (TCS) paid more tax than any other Indian company, followed by Reliance Industries and the software giant Infosys, Mint reported over the weekend.

While TCS paid a total tax of $1.4 billion for the fiscal year ending March 2022, Adani Enterprises paid a mere $58.3 million during the same period, as per a Quartz report mentioning data from various companies' annual reports.

Here's the list of companies that paid the most corporate tax in 2022:

1. TCS: $1404 million

2. Reliance Industries: $937.7 million

3. Infosys: $883.3 million

4. ICICI Bank: $844.9 million

5. ITC: $580.9 million

6. HCL: $417.3 million

7. HUL: $355.6 million

8. Bajaj Finance: $272.2 million

9. Larsen & Toubro: $261.9 million

10. UltraTech Cement: $149.3 million

Also Read: How Rajiv Jain Made Rs 3,100 Crore Profit On Adani Stocks In 2 Days

Why Is It That The Adani Group Does Not Pay More Corporate Tax?

bloomberg

Seven Adani companies are listed firms, with their total market capitalization at $123.2 billion, down from $267.1 billion on Jan. 24th, when the Hindenburg report was released. The report triggered a massive sell-off in Adani stocks. Adani¡¯s personal fortune too crashed, pulling him from the third position to out of the top 30 list in the world's richest list.

But corporate taxes are levied only on profits generated, not on market capitalization. In 2019, the Indian government cut the corporate tax rate to 30% for companies with a turnover exceeding $48.7 million. This was done to entice foreign firms to set up manufacturing units and create jobs. These goals remained largely unmet, in part because the pandemic froze all new investment for a while.

With the 2019 tax cuts, the effective tax rate for Indian companies declined. As a result, they are paying a smaller chunk of their profits as tax. According to the report, large corporations also take advantage of several exemptions to further reduce their taxes.

The Adani Group does not make as huge a volume of profit as Mukesh Ambani¡¯s Reliance Industries or the State Bank of India (SBI), the largest state-owned bank in the country. The net profits of Reliance Industries and SBI stood at $7.4 billion and $4.3 billion, respectively, for fiscal year 2022, while that of Adani Enterprises was $94.5 million.

In 2022, Mukesh Ambani's Reliance Industries topped the Indian charts in terms of net profit, according to the 2022 Burgundy Private Hurun India 500 list. None of Adani¡¯s companies were even on the list. Out of Adani¡¯s many companies, its flagship firm, Adani Enterprises, is the only one to even be turning a profit. As per the report, Gautam Adani¡¯s personal fortune is not only divorced from the lossmaking nature of his companies but also exists mostly as "paper wealth," linked to his holdings in his company's stocks, according to Fitch Ratings.

Also Read: Meet Nathan Anderson, The Man Behind Hindenburg Report

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