Profits of big businesses rose in FY2011, when the economy shrank. – Gudstory

Experts described overall gross corporate income growth of 29.7% in a year in which the economy shrank by 5.8% as “counter-intuitive”, but the trend bodes well for big businesses. Attributed to established supply chains and logistics facilities that enabled them to outperform. pandemic. Experts also attributed this trend to the quick recovery of businesses from the first wave of the pandemic as the economy which had shrunk by 23.4% in the June quarter and 5.7% in the September quarter of FY21, had again entered positive territory. . Till December quarter that limited the overall impact on the corporate sector.

CBDT data showed that in FY21, companies with gross income (before allowable deductions) of Rs. 5 crore and above have registered double digit annual profit growth. The higher the company’s income range, the greater the pace of profit growth.

CBDT data has shown that not only has the number of companies increased 50 crores- The Rs 100 crore gross income limit increased from 1,395 in FY2010 to 1,715 in FY2011, with the sum of gross income in this class of companies increasing by 21% year-on-year in FY2011. 1.19 trillion. Similarly, the number of companies 100 crore- The Rs 500 crore range increased from 1,472 in FY2010 to 1,851 in FY2011 and the gross income of all companies in this range increased by 24%. 3.87 trillion. Number of largest companies in The Rs 500 crore-plus income threshold increased from 413 in FY2010 to 554 in FY2011, and the sum of gross income of businesses in this threshold increased by 39% in FY2011. from 12.7 trillion 9 trillion a year ago. Overall, gross corporate income grew 29.7% in FY21 21.5 trillion. However, businesses in the lower income group recorded a disappointing performance in FY21. Small companies with income up to The income of 1 crore people has either seen a decline or very slow growth. Their performance ranged from a 3.7% contraction to a maximum of 3.7% growth in FY21, meaning small businesses were not able to withstand the impact of the pandemic on the economy.

Sudhir Kapadia, partner, tax and regulatory services at EY, said that after the lockdown, the economy in India opened up quite rapidly in FY21. “The broad inference that can be made is that larger companies were able to withstand the lockdown better due to their logistics strength and wider reach of distributors etc. Additionally, they were able to benefit from the boost to e-commerce. Duration. “While every business was initially impacted during the pandemic, very quickly, we found that in every sector, the top companies began to benefit because of the confidence their customers have in their services and their ability to work remotely,” Kapadia said. Said. The combination of base impact and post-Covid boost received by top companies could explain the overall upward trend in gross corporate income in FY21, Kapadia said.

“Large corporations were able to perform better than small businesses because of their organizational capabilities and the boost they received from the digital economy. Secondly, the impact of Covid was more pronounced in sectors like aviation, entertainment and hospitality, while supplies of daily consumption goods continued to be supplied and those sectors performed very well,” said Ved Jain, former president of the Institute of Chartered Accountants of India (ICAI). he said.

Moreover, what has helped in the overall strong growth of corporate earnings in FY21 is the statistical impact of the disappointing performance of the previous financial year. CBDT data shows that in FY2020, the year that ended with the first few days of the national lockdown to fight the pandemic, gross corporate income saw an annual contraction of 2.1%. 16.6 trillion.

In the case of personal income tax, 63.6 million people filed their tax returns in assessment year 2021-22, up from 60.2 million in assessment year 2020-21. The gross income before deductions reported by individuals for FY21 is 44.6 trillion, 7.6% more than the gross income reported last year.

However, it does not indicate the impact of the pandemic on those not filing tax returns. In FY2011, total income of businesses and individuals increased by more than 14% 69 trillion, the data showed.

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Updated: October 16, 2023, 11:46 PM IST