The Central Board of Direct Taxes (CBDT) appears to be racing against time.
With just 26 days remaining in this financial year, it must collect as much as 30% of its targeted revenue by way of direct taxes on both individuals and corporates.
CBDT chairman SSN Moorthy told reporters on the sidelines of CIIs Budget Impact Analysis on Friday that tax collection so far has been Rs 2.8 lakh crore, against a target of Rs 4 lakh crore. Thats 70% of the target.
CBDT had revised the target for the year upwards from Rs 3.7 lakh crore set earlier, based on a revival in the economy. The collection target for Mumbai was set at Rs 1.42 lakh crore, around 42% higher. We are trying our best to achieve the target. We are making serious efforts, said Moorthy.
But not everyone believes it will.
Typically, it is the corporates, which bear the brunt of such ambitious revenue targets. Indeed, some firms have complained that they are slapped with huge taxes towards the end of the financial year to help achieve revenue targets and later asked to claim refunds.
A senior official of Oriental Insurance Company had told DNA Money a couple of years ago that it was asked to pay Rs 350 crore as capital gains tax, even though it was not liable. We were told that the tax has to be paid to meet the revenue targets and a refund can be claimed later, the official had said.
The message here is that as such, the stated tax collections are inflated and not the real money in the kitty.
Its a cycle wherein the income tax department asks various firms each year to shell out taxes and then collect refunds, say chartered accountants.
The recorded tax revenues are not the actual revenues as a part of it goes away as refund, a tax consultant said, requesting not to be named.
But the CBDT chief denied this was the case. We dont enter into such ad-hocism. When they file returns, they may be due to collect certain refunds. But we dont force anyone to do that unnecessarily.
When the revenue targets fall short, what is found in practice is that the level of aggression and anxiety at the ground level increases.
So, existing taxpayers are further burdened with aggressive tax assessments. Therefore the ideal policy outcome would be to broaden the tax rates, so that we can have moderate tax rates and moderate tax assessment, Sudhir Kapadia, tax partner, Ernst & Young said.