Official sources said that the income-tax department has recovered Rs 8,897 crore of direct tax arrears up to December 31 this fiscal, comfortably surpassing the annual target of Rs 7,000 crore. This performance may have prompted the Government to place a much stiffer target for 2007-08, sources said.

It was also pointed out that the arrear collection target of Rs 7,000 crore for 2006-07 was much lower than the target of Rs 10,000 crore that was set for 2005-06.

As against the target of Rs 10,000 crore, the income-tax department mopped up only Rs 7,084 crore of tax arrears in 2005-06. This moderate performance in 2005-06 prompted the Government to lower the arrear collection target for 2006-07 to Rs 7,000 crore, sources said.

Part of budget estimate

The direct tax arrears collection target of Rs 9,000 crore forms part of the 2007-08 budget estimate, which has been pegged at Rs 2,67,490 crore in the case of direct taxes.

In the case of indirect taxes, the Government hopes to collect Rs 700 crore of arrears of customs duties, Rs 1,150 crore of central excise arrears and Rs 700 crore of arrears of service tax during 2007-08.

Meanwhile, the Government has, for the first time in a budget document (receipts budget 2007-08), given age-wise position on tax revenues raised but not realised (as at the end of reporting year 2005-06).