Tax Planning Strategies and Corporate Profitability: A Study of Selected Indian Listed Companies

Corporate finance often assumes that a lighter tax outcome translates directly into stronger after-tax profitability, yet this assumption is rarely tested jointly across several profitability measures using current Indian evidence. In an environment of “Business Unusual,” shaped by pandemic disruption, recovery, and shifting financial conditions, firms need to know whether tax planning can be relied on as a source of financial resilience. This study uses 150 firm-year observations from 30 listed Indian companies over FY 2020-21 to FY 2024-25 to examine whether three tax indicators (Effective Tax Rate [ETR], Total Tax Expense, and Deferred Tax Expense/(Benefit)) are associated with four profitability outcomes: Return on Assets (ROA), Return on Equity (ROE), Net Profit Margin (NPM), and Earnings Per Share (EPS). The analysis uses descriptive statistics, five-year trends, Pearson correlation, and multiple regression. Tax and profitability figures are widely dispersed across the sample. Most bivariate relationships are weak and statistically insignificant; the only one significant at the 5% level is a modest positive correlation between Deferred Tax Expense/(Benefit) and EPS (r = 0.189, p = 0.021). None of the four regression models is significant overall, and they explain only about 2.5% of the variance in ROA, 3.0% in ROE, 4.1% in NPM, and 3.9% in EPS. Within the EPS model, Deferred Tax Expense/(Benefit) is a significant positive predictor (β = 0.175, p = 0.037). The evidence is mixed: tax indicators appear in some profitability outcomes, but ETR, Total Tax Expense, and Deferred Tax Expense/(Benefit) do not provide a strong standalone explanation of profitability at the 5% level. Tax planning should therefore be embedded in a broader approach to profitability and resilience management rather than judged in isolation, a point relevant to managers, investors, and researchers.