The income tax (I-T) department has admitted that over two-third of tax demands made till March 31, are difficult to recover. The department now plans to adopt a multi-pronged strategy to minimise such dues.
As on March 31, “it is seen that out of total outstanding arrear demand of ₹8,27,680 crore, it is difficult to recover ₹6,73,032 crore.
Thus, out of total demand, 81 per cent is reportedly difficult to recover.
This leaves only 19 per cent of demand as collectable, which is an indefensible situation and to make matters worse even this portion has not been collected in earlier years,” a note circulated during the annual conference of top brasses held here last week said. Top among the list of reasons given for ‘difficult to recover’ over ₹2.63 lakh crore is ‘no assets/inadequate assets for recovery’.
Over ₹78,000 crore demand has been stayed by various courts and appellate tribunals, while there is TDS/prepaid taxes mismatch amounting to around ₹52,000 crore. The reason ‘assessees not traceable’ accounts for ₹28,500 crore of the demand.
Alarming situation Terming the situation as ‘alarming’, the note expressed concern over the adverse comments from various quarters.
A Parliamentary Standing Committee, in its recent report, observed: “It defies logic as when the government is exploring all avenues, including disinvestment etc, to mop up funds why has this captive source been given a long rope. While taking a serious view of the laxity of the department in collecting even undisputed taxes, the committee recommended urgent, time bound and concrete action plan for recovery of undisputed and uncollected tax revenue.”
The tax authorities first want proper due diligence to be done before making an entry about ‘demands difficult to recover’ as these are often not verified.
Since ‘assessee not traceable’ and ‘assessee having no assets/inadequate assets’ are major contributors in the rising dues, it suggested that it is best to obtain details of bank accounts, debtors, moveable & immoveable assets at the assessment stage itself to prevent any demand from becoming uncollectable. Also, before qualifying any assessee into these two categories, a reference to Individual Transaction Statement (ITS) should be made, as it contains data relating to address, bank account, assets, foreign travels, demat accounts, etc.
Another suggestion is for referring the matter to the Financial Intelligence Unit besides publication of names of the defaulters. Last fiscal, 49 names were published.
For the current fiscal, officials have been asked to submit proposals by July 31.