India’s net direct tax collections grew 21.8% to ₹9.57 lakh crore by October 9, surpassing over half of the Budget estimates for this year, with personal income tax revenues rising 32.5% and corporate taxes increasing 12.4%.
While tax refunds amounting to ₹1.5 lakh crore have been remitted to taxpayers so far, some refunds are being withheld on the basis of pending tax demands from the past that taxpayers are being given a chance to address. Moreover, challenges with validating bank accounts of about 35 lakh taxpayers, who may have provided incorrect bank branch codes, are also posing a hurdle, Central Board of Direct Taxes (CBDT) chairperson Nitin Gupta told The Hindu.
For refunds of up to ₹5,000, the Income Tax (IT) department is not restricting payouts. However, over that threshold, taxpayers are being informed if there are any outstanding tax dues. On tax demands in some cases being raised from as far back as 2010-11, Mr. Gupta indicated these could be legacy cases from the time around 2011 when the department switched from using registers to an online system for recording assessment orders.
Technology shift
“The pending demands could be due to the technology shift or there could be an error on the part of our officer to not update the demands… So in any case, we are asking the taxpayer to respond to our query. If they agree with the demand, it needs to be adjusted against the refund. If the taxpayer contests it, saying ‘I had already paid or it has been reduced or rectified’, then something more has to be done to update our system based on the data the taxpayer provides. That is the reason refunds are held up in some cases”, the CBDT chief said.
As on September 23, the number of income tax returns filed stood at 7.09 crore, and refunds made in 2.75 crore cases. By October 9, the total returns filed had risen to 7.27 crore and 7.15 crore returns were verified. Last year, 7.5 crore tax returns were filed.
The direct tax kitty so far minus the refunds, accounts for 52.5% of the Budget estimates for the year. Gross collections stood at ₹11.07 lakh crore, almost 18% higher than the same time last year, with corporate tax collections up 7.3% and personal income tax (PIT) revenues increasing 29.5%.
Combined with revenues from the Securities Transaction Tax, the PIT kitty had grown 29.1% at the gross revenues level and 31.85% in net revenues.
