Call them vanishing bucks. Over 80% of Indias cumulative tax arrears may never be recovered. With the global meltdown beginning to hurt India Inc and its profitability, the tax arrears of a whopping Rs 1,30,733 cr would have been a major relief to the government during this election year.
A finance ministry analysis has, however, treated a mere Rs 12,516 cr as collectible as on August 1, 2008, sources in the ministry told SundayET. While a major chunk of the non-recoverable amount is related to the security scam of 1992, there are cases where defaulters have no assets left. Also, there have been several cases where tax payers have either vanished or got stay orders from court.
Had the total arrears been recovered, it would have been one thirds of this years revised target of Rs 3,95,000 cr, or 40% of the direct tax collection last financial year.
In fact, SundayET managed to get a glimpse of the numbers according to which there were tax demands of Rs 29,886 cr from notified persons, including big bull Harshad Mehta, under Special Court (Trial of Offenders relating to Securities) Act 1992.
According to estimates, the total remaining assets of defaulters linked to the security scam of 1990s are a mere Rs 1200 cr now. But banks will have the first claim on that seized asset. So, we are unlikely to get any pie out of that huge arrear, a source in the finance ministry said.
According to the analysis, the recovery of another big amount of Rs 15,567 cr may not be possible as these are related to cases where tax payers have virtually no assets at all. In cases relating to tax arrears of Rs 9,193 cr, the CBDT has lost court battles, but has appealed once more.
Significantly, the internal analysis of the ministry has shown another category of vanishing tax payers who had an outstanding of Rs 8,287 cr. In most of these cases, partnership firms have just vanished without paying taxes. And they are non-traceable till date, said an official.
Though the CBDT has recovered just Rs 3,843 cr between April 1, 2008, to August 31, 2008, from the outstanding tax arrears, the department may step up its activities to recover the collectible dues in the wake of a possible hit on tax collection for the rest of the fiscal.
The current financial turmoil may have a toll on our tax collection from now on and hence we have to recover each pie from the collectable category, a CBDT official said. During the last financial year, Rs 9,058 cr was recovered from outstanding arrears.