The Income Tax (I-T) Department is holding back tax
refunds of many private and public sector enterprises, likely equaling
to 5-10 percent of total tax collection in 2017-18, sources in the
department told Moneycontrol. The delay in some cases extends up to
four years.
Direct tax collection in 2017-18 was Rs 9.95 lakh crore, exceeding the revised budgeted target of Rs 9.8 lakh crore.
The
I-T Department is likely to be holding the refunds to exhibit a high
tax collection figure. An additional commissioner in the department told
Moneycontrol, "We have not received any formal communication from
Central Board of Direct Taxes to delay tax refund to corporates.
However, we
are also not giving approval for any major tax refund to
corporates."
Speaking about the volume of the pending refunds, the
source said, "About Rs 1 lakh crore of tax refund is stuck at this
point of time across the country, which is almost 10 percent of tax
collection. In my circle alone, thousands of crore of tax refund is
pending. In some companies, the tax refund is pending for the last 3-4
years."
Another
officer at Aaykar Bhavan in Delhi told Moneycontrol, “The delay is
creating pressure on us and we have shared this concern in one of the
meetings of the unions of Indian Revenue Services, Mumbai, in October."
Withholding the refund can be expensive for the government.
As
per the Income Tax Act, we have to pay an interest on delayed tax
refund at the rate of six percent after 90 days in the case of an
appeal. However, the department has held back the refund to show a good
number in tax collections, another source said.
Aarti Sathe, an
Independent Counsel who deals in income tax cases told Moneycontrol “The
department has shown a very lackadaisical attitude towards issuing
refunds. In most cases, it amounts to denying the assessee the money
which rightfully belongs to them. The Dept is bound to refund delayed
money with interest as per section 244A of the act. With the present
amendments of digitising filing returns and refunds without human
interface, hopefully, this problem will be resolved."
Revenue from
direct tax grew 13.6 percent to Rs 7.43 lakh crore in the first nine
months of the current financial year 2018-19 (April-March. The tax
receipt figures indicate net direct tax collection, which is arrived
after adjusting refunds.
Following is the response of the CBDT to a query sent by Moneycontrol:
"It
is stated that the Department has been focusing on issuing refunds
expeditiously. It is pertinent to state that during F.Y. 2018-19, over
2.57 crore refunds have been issued as against 1.75 crore refunds during
the corresponding period of F.Y. 2017-18, marking, not only an increase
of 47% but also representing more than 94% of all refund claims."
"In
fact, the total amount of refunds issued during F.Y. 2018-19 stands at
Rs.1.42 lakh crore as compared to refunds of Rs. 1.26 lakh crore issued
in the corresponding period of the immediately preceding year. This
translates into an increase of 12.5% over the preceding year. The
balance refund claims pertain to such cases as were either selected
under scrutiny or awaiting response from taxpayers on defective returns
or are under processing as the income tax returns claiming such refunds
have been filed only in the past few months."