Ahmedabad owes Rs4,800 crore to income tax department

Taxpayers in Ahmedabad alone owe the income tax (I-T) department a whopping Rs4,800 crore in unpaid taxes. This huge amount, however, is not the outstanding tax dues of any one year but is the total of I-T dues accumulated over the last many years in the city.

Unfortunately, many taxpayers have been taking advantage of the lengthy legal process to avoid paying taxes. In the case of Ahmedabad, too, the I-T department had to declare the outstanding dues as ‘arrears on demand’ after many taxpayers went to court against the tax assessment made by the department.
Sources in the I-T department, Ahmedabad, said that the total tax amount outstanding against taxpayers in Ahmedabad, Surat, Baroda and Rajkot came to around Rs7,555 crore. This is more than the annual tax collection in states such as Bihar and Jharkhand, a source added.

The sources said that, after assessment of their income, the I-T department bills individuals and groups for the income tax they are supposed to pay. Taxpayers have a right to disagree with the department’s assessment and file an appeal with the appellate authority, tribunal or even in courts. Over the years, the incidence of Ahmedabad taxpayers going to court against their tax assessment has risen sharply. The sources said that the I-T department is forced to declare the assessed income tax as ‘arrears on demand’ as many taxpayers manage to get a stay against the department’s assessment.

“According to the rules, if a taxpayer’s goes into appeal against the I-T department’s assessment, the tax amount outstanding against him has to be converted into ‘arrear on demand’ within 30 days. “The entire legal process is so lengthy that we are rarely able to recover the outstanding taxes on time,” said a highly placed source in the department.

Other sources said the department’s apathy is also to blame for the piling up of unpaid dues in Ahmedabad and other major cities of Gujarat. In many cases, taxpayers have become absconders or were not traceable anymore.

Sources said that when a taxpayer fails to pay the money outstanding against him even after the appellate authority has ruled against him, the department declares him a ‘tax defaulter’. The city-based Meradia group is allegedly among the big defaulters in the Ahmedabad and is reported to owe the I-T department Rs40 crore in unpaid taxes.

Sources said income tax collections were the highest in Ahmedabad as the city has a large number of taxpayers. Other districts where I-T collections are high are Surat, Baroda and Rajkot. The department is preparing a list of defaulters, which will soon be posted on its official website.