In a troubling finding during its audit, the Comptroller and Auditor General of India has observed that the government of India has total tax demand arrears of staggering Rs 11 lakh crore till the end of 2017-18 financial year. Out of these, 98% or 10.94 lakh crore appear to be difficult to recover for various reasons.
In a report recently tabled in Parliament, the CAG has pointed out that some of these tax arrear demands are long pending as arrears doubled from Rs 5.75 lakh crore in 2013-14 to Rs 11.14 lakh crore in 2017-18.
The CAG noted that most of these arrears are difficult to recover because entities against whom these demands have been made have no assets remaining to recover. In several other cases, the assesses are not traceable raising serious questions on the administration of the tax department.
Other reasons for no recoveries include no assets, inadequate assets, cases under liquidation, assesses not traceable, demands stayed by courts or tribunals and other mismatches.
“These demands have been increasing year after year and accounted for 98.2% of the total arrears of demands in FY 2017-18 as against 98.6% in FY 2016-17,” the auditor said.
The audit has also raised concern over amount locked up in appeal cases. “The appeal cases with commissioner of Income Tax (Appeals) is more than the revised revenue deficit of the government of India in FY 2017-18,” CAG pointed out. The appeals and writs pending with the Income Tax appellate tribunals, high courts and Supreme Court as on March 31, 2018 are over 82,600 with amount locked up in litigation to the tune of Rs 4.42 lakh crore, reported the Economic Times.