How to find if Tax is paid by company properly or not

Investment Learning
1

Hello friends,

As we all know if a company is not paying TAX properly,then it should be looked with suspicion.
Now how can we understand if a company is paying its tax properly or not ???

2

@nabilmoideen

You can cross verify taxes shown in income statement with taxes paid in the cash flow statement. If there is large variance between taxes paid in the income statement versus taxes actually paid which is shown in the cash flow statement it will give you a hint on how much as a percentage of income is a company paying its taxes

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3

Hi Karan,
Many times we see that cos pay less tax than usual corporate tax of 33%. Where to dig in to find low taxes paid by any company. I mean where can we find tax rebates and its details for any firm.

Thanks

4

Cross check taxes paid in income statement with taxes paid in cash flow statement. If taxes are paid at the usual 33% +/- few bps then it is not a problem. If there are variations we need to dig into further as to what is the reason. I usually start this way as if there are differences i try to find out is there any particular reason like SEZ or plant in a tax free zone. Then how much more time till the exemption stays. Usually the tax rate difference is the trigger. Apart from this commercial softwares for fundamentals can also help to screen companies with a lower tax rate

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5

@karu_lamborghi_ thank you for the advise.
Can you name few of these commercial softwares which can be used for screening purposes please…

6

@nabilmoideen
Softwares by Ace Equity or Capital line or others can help you outwith specific queries.

7

@karu_lamborghi_ I guess these are paid softwares :joy: …

8

yes they are. Used them in the early part of my career so have some idea :wink:

9

Just asking -

Is there a way that we can verify the tax paid using the Company PAN Number using the income tax websites? Just like we look for Tax Paid, Deductions, Service Tax, VAT etc?

Thanks,
Manish