The recent case of a tax dispute between the income tax (I-T) department and IBM India is not the only case where thousands of crores of government money is yet to be recovered. Twenty-five companies and individuals together owe a whopping Rs2.4 lakh crore to the government in income tax which the authorities have failed to recover for years. To date, more than Rs4 lakh crore remains uncollected.
Apart from money laundering and security scam kingpins such as Hasan Ali, Harshad Mehta and Ketan Parekh, some state-owned and blue chip companies also figure in the list of top tax defaulters, data submitted by the ministry of finance to the public accounts committee (PAC) revealed.
The ministry of finance is striving hard to improve its revenue collection from the defaulters so that it meets the current year’s target of Rs5.65 lakh crore—17 per cent more than last year’s collection. The recovery of the tax money will not only help reduce the fiscal deficit but also make more money available for welfare programmes.
I-T department officials admit that it may not be possible to collect the entire amount due from defaulters as they are either untraceable or the assets seized by the authorities are inadequate.
The Comptroller and Auditor General’s (CAG’s) report says that more than 94 per cent of the amount due is difficult to recover. In fact, looking at the high number of pendency cases, the CAG in its latest report said that the recovery mechanism is deficient. However, the Central Board of Direct Taxes (CBDT) said that acute shortage of manpower is responsible for the ineffective recovery procedure.
The PAC, too, has taken note of the issue and mentioned it in its report submitted in August. The committee, while recommending the government to strengthen its machinery to trace defaulters, expressed the need for publishing defaulters’ namesin the media. Those cases involving huge sums are being monitored by the CBDT on a quarterly basis. A committee led by a CBDT member was formed in July 2010.