Govt may write off Rs 85,000 crore tax arrears

NEW DELHI: The government may have to write off a whopping Rs 85,000 crore tax arrears out of the total arrears accumulated over the past several years as these have been found "non-recoverable" by Income Tax department.

Out of the outstanding Rs 1,19,000 crore tax arrears up to 2003-04, about Rs 85,000 crore is "non-recoverable". This includes Rs 28,400 crore outstanding against Harshad Mehta Group of companies, banks and stock brokers involved in 1992 Securities Scam.

The department, which has so far recovered about Rs 10,000 crore tax arrears against the target of Rs 11,000 crore for 2006-07, has expressed helplessness in recovering the "non-recoverable" tax arrears.

"In fact, about Rs 85,000 crore arrears are outstanding only on paper, and are mounting every year due to interest addition," a senior Income Tax official said.

The "non-recoverable" dues also include about Rs 12,000 crore against those companies and assesses, whose assets have reduced due to closure of the units or fall in stocks.

In many cases, the companies have reportedly vanished from the market, or funds have already been transferred elsewhere before the recovery of tax arrears.

In the Harshad Mehta case, the custodian appointed by the Supreme Court is in possession of Rs 1,700 crore funds, which could be distributed only among various stakeholders after the decision of the case.

The department has also expressed doubts about recovery of tax arrears from companies and persons involved in various scams like Telgi Scam and Fodder Scam in Bihar.