15% shortfall in direct tax collections; CBDT cracks the whip to meet targets

The Central Board of Direct Taxes (CBDT) is unhappy with the 15 percent shortfall in income tax collections from its initial target of Rs 12 lakh crore. Members of the policy-making body of the Income Tax Department view the shortfall as alarming, necessitating immediate redressal.

CBDT has written a letter to all Principal Chief Commissioners on March 26 asking them to enhance the tax recovery process, a copy of which is in Moneycontrol’s possession.

"Progress in tax collection has been reviewed as against the targeted Rs 12 lakh crore. Only 85.1 percent of the targeted or Rs 10.21 lakh crore has been collected as of March 23. A head-wise analysis indicates negative growth in regular collection at 6.9 percent as compare a negative 5.2 percent last week. This is alarming and needs immediate attention," the letter stated.

A CBDT member said urgent steps need to be taken in cases where arrears are due. CBDT is taking various measures to achieve this target. This include: not releasing refunds and higher target for initiation of prosecution cases against repeated income tax offenders of income tax.

A source close to the development told Moneycontrol, "Prosecution cases have doubled in the last two-three years, but tax collections depends on overall economy, which is not performing as per expectation."

Meanwhile, independent tax counsel Aarti Sathe said, "As a result of the shortfall in tax collections and taking cue from the CBDT whip issued to tax officers, the department is in a scurry to file miscellaneous applications to the ITAT to not allow extensions of stays already granted, where the period has gone beyond 365 days."

She added, "This extension has been legitimately sought by assesses as their appeals on merits have not been heard on account of delays not attributable to them.

"The department is pushing for early hearings of high stake matters, holding on to refunds etc only to show higher tax collections."