New Delhi, Mar 25: A parliamentary panel has asked the government to formulate a concrete action plan to recover tax arrears that have reached Rs 11.5 lakh crore. The standing committee on finance (2017-18) has said that it is "alarming" that the department of revenue seems to be caught up in the vicious cycle of tax arrears.
More than Rs 11.5 lakh crore (Rs 9,30,741 crore in direct taxes and Rs 2,28,530 crore in indirect taxes) are outstanding in the form of tax arrears, it said, adding this is almost the size of an economy.
Considering the fact that tax arrears have been increasing year after year, the committee recommended for "devising a concrete action plan and a roadmap to clear the backlog through a time bound fast track mechanism".
On direct taxes, it said that over 94 per cent of it has been categorised under 'demand difficult to recover' and in indirect taxes, only 22.84 per cent are said to be clearly recoverable. It also suggested that tribunals and courts should be regularly moved for early and expeditious hearing of cases. The committee has also expressed concerns that over Rs 1.26 lakh crore has been paid as refunds upto January this year, with interest outgo of Rs 10,312 crore in 2016-17.
"This raises an apprehension that the assessees may be constrained to pay excess advance tax to fulfil revenue targets of the department," it added.
It said that there is an apprehension that this practice of excess refunds may encourage connivance between tax officials and assessees to the detriment of the department. The committee asked for looking at reasons behind excess refunds and accordingly take corrective steps.