The Finance Ministry may have had to impose additional taxes to improve its revenue mop-up, but uncollected demand and arrears from direct and indirect taxes rose to over ₹8.9 lakh crore in 2014-15, according to the Comptroller and Auditor General of India.

Of this, the largest chunk is uncollected tax demands amounting to ₹7 lakh crore in direct taxes in 2014-15 that had risen by 2.4 times since 2010-11.

“Audit noticed that the uncollected demand increased from ₹5.75 lakh crore in 2013-14 to ₹7 lakh crore in 2014-15,” said the CAG report on Direct Taxes that was tabled in Parliament on Friday. The Income Tax Department had indicated that over 96 per cent or ₹6.73 lakh crore would be difficult to recover in 2014-15, said the report, adding that various factors including inadequate assets for recovery, cases under liquidation and BIFR, assessee not traceable, stay of demand made it difficult to recover the dues.

“The recovery mechanism is deficient as certified demand remaining uncollected increased to ₹2.4 lakh crore in 2014-15 from ₹2.2 lakh crore in 2013-14,” said the report.

The number of direct tax assesses however, increased to 3.67 crore in 2014-15 from 3.1 crore in the previous year.

Of this, non-corporate assessees rose 18.6 per cent to 3.6 crore while corporate assessees increased 6.1 per cent to 6.75 lakh in 2014-15.

Significantly, the number of non-corporate assessees with income above ₹10 lakh jumped up to 46.11 lakh in 2014-15 from 34.24 lakh in the previous year.

In three separate reports tabled in Parliament, the CAG also noted that arrears in indirect taxes were rising. “Customs revenue of ₹20,808 crore demanded up to March 2015, was not realised by the department at the end of 2014-15,” said a report on customs duty.

Significantly, the report also revealed that the revenue foregone (₹4.65 lakh crore) as a percentage of customs receipts was the highest in 2014-15 at 265 per cent.

Arrears in service tax Similarly, arrears in service tax rose to ₹76,928 crore in 2014-15 of which just ₹ 901 crore was collected. This is in sharp contrast to 2013-14 when out of ₹69,863 crore of arrears, ₹7,311 crore was collected in the fiscal.

Calling it a matter of concern, a CAG report on service tax said that the recovery mechanism needs to be strengthened.

The CAG in a third report on central excise also called for better recovery mechanisms as it found ₹61,872 crore of arrears at the start of 2014-15, which rose to ₹93,925 crore by the year end. Of this, just ₹1,616 crore was collected in the year.

“It is matter of concern that the collection as ratio of arrears is falling continuously. In 2014-15, it has fallen drastically to 2.61 per cent compared to 7.89 per cent in 2013-14,” it said.

The report also said that in 2014-15, the increase in excise duty on petrol and high speed diesel led t higher overall growth of central excise receipts. Except petroleum products and plastic, revenue growth in other sectors was either stagnant or negative, said the report.

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