Kerala: CAG report points to under-recoveries worth ₹1,771 crore in tax collections

Our Bureau Thiruvananthapuram | Updated on January 20, 2018 Published on February 24, 2016

Non-assessment, grant of irregular exemptions and application of incorrect tax rate detected

The Comptroller and Auditor General (CAG) has detected various lapses in commercial tax collection in the State, leading to cumulative under-recoveries of ₹1,771 crore during 2014-15.

The CAG report on revenue sector for the year was tabled in the State Assembly on Wednesday.

Out of VAT net

The lapses detected in 1,812 cases included sales turnover escaping assessment, grant of irregular exemptions and application of incorrect tax rate.

The department failed to register a majority of dealers with the Value Added Tax (VAT) system and bring them under the tax net.

Out of the 13.41 lakh establishments operating with a fixed structure, only 2.20 lakh have been registered under VAT.

The CAG recommended that all dealers be brought into the tax net by using the inputs available from various agencies. It has also proposed to have a manual for VAT assessments.

Online business

It has also found that the department was not using available inputs to monitor the trade activities of unregistered dealers.

No action was taken under the Kerala Value Added Tax Act, 2003, to levy tax on online business in the State. The revenue loss for three years – 2012, 2013 and 2014 – amounted to ₹174.33 crore.

The department stated that under sales tax, the receipts were less than the budget estimates due to fall in collections on rubber, motor vehicles, petroleum products, IMFL, gold and such others.

Increase in the sale of lottery tickets has reflected in the revenue collection from the Lotteries Department.

Arrears amounting to ₹3,339.06 crore from various departments could not be realised as stay orders were pending against their collection.

The departments concerned have not taken effective steps to vacate the stay orders and collect the arrears.

Vehicle tax

One-time tax realised on vehicles was at less than the prescribed rate. No fine has been realised from overloaded vehicles. Tax levied from stage carriers also was at less than the rate prescribed by rules.

Completion of buildings was either not reported by village officers or, even if reported, they were not assessed to building tax by the assessing authority.

Luxury tax was not assessed and demanded by the revenue authorities. Cess on buildings with a plinth area above 4,000 sq ft and above was not demanded and collected.

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Published on February 24, 2016
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