The total tax arrears have galloped to nearly Rs 2 lakh crore till September 30, 2009, an amount sufficient to fund at least half of the government’s budget deficit for the current financial year. But, surprisingly, the government has said that it can only recover Rs 13,000 crore, about 6.5% of the total outstanding, from corporates and individuals on whom the tax is pending.
The amount difficult to recover is a staggering Rs 1.85 lakh crore. Most of this outstanding amount is tied up in legal cases which are pending before courts and tribunals. Corporate income tax arrears is Rs 1.33 lakh crore and personal I-T is 65,000 crore. In response to a Parliament question, the finance ministry said these dues could not be collected because of various reasons like cases pending under special courts, companies under liquidation, no assets or inadequate assets for recovery or simply because a stay has been given in the matter by courts. However, the government has taken measures to recover the outstanding amount and bring evaders to book like attachment of bank accounts and immovable property of such entities, auctioning such property and setting up a taskforce to monitor all such arrear cases.
The government has also identified cases involving large amounts pending before several tribunals and requested these officials to expedite such matter and dispose of appeals early so that arrears could be recovered. There are at least 324 lakh assesses in the country — 3.35 lakh companies and 320 lakh non-companies. It has steadily grown over the years. There were 319 lakh assesses in 2006-07 which went up to 336 lakh assesses in 2007-08, but came down to 324 lakh in 2008-09. The government has taken a host of measures to widen the tax base. It has been constantly using the annual information report and made quoting of PAN numbers mandatory to bring more entities under the tax net.