CBDT chief cautions I-T officials about direct tax collection growth rate

Says low mop-up may affect the Budget estimate of Rs 11.5 trillion for the current financial year

Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra has cautioned income-tax (I-T) officials about the direct tax collection growth rate, and said it can adversely affect the Budget estimate of Rs 11.5 trillion for the current financial year.

In an internal communication to principal chief commissioners of income-tax on January 4, the apex body for direct taxes asked its field officers to step up efforts and put more focus on recovering tax arrears and the current demand. “This is a matter of serious concern and concerted efforts are now required to be made to drive up recovery from arrears and current demand,” Chandra said in an internal letter to I-T commissioners.

Business Standard has reviewed the internal letter sent to I-T officials.

Chandra said net collection was growing at 13.6 per cent against the Budget target of 14.7 per cent for the current financial year.

Emphasing the trends of growth, particularly in tax collection, under regular assessment tax (recovery from arrears and current demand), the CBDT has said it is “extremely low” at 1.1 per cent (up to December 2018) as against 15.6 per cent in the same period last year.

To maximise tax collection in the last quarter of this fiscal year, the CBDT chairman suggested rigorous strategies and asked officials to implement them immediately. According to the action plan, tax sleuths have been asked to file prosecution cases against people wilfully evading outstanding taxes; and complete the non-time-barring assessments in cases where demand is likely to be raised and collected in this fiscal year itself. 

Further, the CBDT wants to put up the sale of attached properties in cases where normal recovery measures have not yielded results.

To shore up revenue, the CBDT has asked officials to conduct recovery surveys where significant amounts could be recovered. The apex body wants to monitor payments of the dividend distribution tax by obtaining information from the Securities and Exchange Board of India (Sebi).

Besides, I-T officials have been asked to verify the payment of advance tax by the seller of properties in cases where tax deduction at source (TDS) has been made by the buyer, and to catch hold of deductors where the tax deducted at source (TDS) has not been paid to the government account.

The CBDT said officials could adopt other strategies depending on the nature of the respective region and jurisdiction.  Official figures showed tax collection was on track in the first six months of this fiscal year. According to official numbers available on the CBDT website, gross direct tax collection rose 15.7 per cent year-on-year to Rs 6.75 trillion in the first eight months of 2018-19. In the April-November period, net collection stood at Rs 5.51 trillion, 14.7 per cent higher than the previous year. 

Net collection in the eight months accounted for 48 per cent of the annual Budget estimate of Rs 11.5 trillion, following the trend of last year.