Searches and surveys have dropped up to 85% during Apr-Dec against last fiscal; govt faces Rs 40,000 cr tax collection shortfall
The fear of being labelled as tax terrorists has led to a drastic drop in search and surveys by the income-tax department, which is being reflected in a Rs 40,000 crore likely tax collection shortfall this fiscal.
Up to December, both searches (where I-T sleuths raid both business and residential premises of an entity) and surveys (where department officials raid only business premises) stood at 105 and 75, respectively compared to number of 273 searches and 503 surveys in the previous fiscal.
During April-November, direct taxes, which include income and corporate taxes, grew 12.63% to Rs 3.69 lakh crore. This forms 46.26% of the targeted Rs 7.97 lakh crore.
This has certainly prompted Central Board of Direct Taxes (CBDT) chairman to call for a meeting. "CBDT chairman A K Jain on Tuesday interacted with all regional heads of I-T department via video conferencing and reviewed the tax collection performance," a senior I-T official told dna.
According to official data, this year (March to November), the I-T department has detected undisclosed income worth more than Rs 16,000 crore and seized assets worth Rs 1,200 crore. This includes declarations worth over Rs 4,160 crore by over 600 individuals under black money law--Undisclosed Foreign Income and Assets (Imposition of Tax) Bill.
While the corresponding cumulative figures of undisclosed income for the 2014-15 fiscal was Rs 6,000 crore. However, last fiscal there was a shortfall of only around 2% of the budgeted target of Rs 7.36 lakh crore.
dna has learnt that for the current fiscal the tax mop-up target was seen ambitious based on 3.9% fiscal deficit target. Up to November 2015, the government has achieved 87% of the targeted fiscal deficit, leading to speculation the government could fall short of the target.
Sources said this fiscal the action was conducted by the department mostly against pharmaceuticals companies, jewellers, real estate developers, commodity exchange, brokering firms and doctors to check tax evasion. This includes search operations on National Commodity & Derivatives Exchange (NCDEX) to check pulses hoardings, Apollo Hospitals, apart from several small and medium-sized property developers across the country.
However, no major search operation happened so far in the current year.
The led government which had assured foreign companies and investors that India would no longer engage in 'tax terrorism' faced big time criticism in the current fiscal, right from stringent ITR forms to Minimum Alternative Tax (MAT) notices to foreign investors. In addition, service tax hike to 14.5% under the anticipation of implementing Goods and Services Tax (GST) has prolonged the uncertainty among investors and domestic firms.
A tax expert said, "The government should have realistic target of tax collection. It is not hidden that corporates had a difficult earning period in the first three quarters of this fiscal. Moreover, the high interest rate regime had created hurdles for the growth. Probably, the department has avoided harsh actions such as searches and seizure as these measures do not yield the desired revenue."
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