Uncollected income tax arrears could give Modi govt a Rs 1.2 lakh crore boost ahead of Budget 2019.
Tax recovery is The topmost priority of the Government. The government has now issued a stern warning to tax evaders, saying those who fail to file income tax returns within three weeks will face stringent action.
However, the government’s record of collecting even undisputed tax arrears doesn’t inspire much confidence.
The government’s tax collection machinery is sitting on undisputed tax arrears of over Rs 1.33 lakh crore due for one year or more, an amount almost equal to the budgeted expenditure for three important departments – health and family welfare (Rs 52,800 crore), school education and literacy (Rs. 50,000 crore) and department of higher education (Rs 35,010 crore) in the last budget.
Mere collection of undisputed tax arrears that were due at the end of reporting year 2016-17 will give the government nearly Rs. 1.34 lakh crore that is 95% of the government’s entire food subsidy bill as per the revised estimate for FY 2017-18.
The central board of direct taxes (CBDT) which issued the warning against tax evaders alone accounts for more than 1.2 lakh crore or 90% of undisputed tax arrears due to the government.
This amount alone is Rs. 40,000 crore more or 150% of the entire disinvestment target of Rs. 80,000 crore set by finance minister Arun Jaitley for FY 2018-19, which the government is finding extremely difficult to meet.
More is the deficit, more is pressure on the taxpayer for recovery of tax whether it is disputed demand or undisputed.