Concerned over high interest outgo on tax refund claims, the finance ministry has asked the income tax department to speed up the processing of such claims for the current financial year.
The slow processing of tax refund claims has always been a bugbear for the government and taxpayers alike. The backlog has risen steadily over the years. In 2005-06 there were 5.7 lakh refund claims, which has shot up to 19.4 lakh in 2009-10.
The finance ministry has asked income tax department to take the help of the Institute of Chartered Accountants of India (ICAI) - the regulatory and governing body of CAs - to clear up long-pending claims.
"The income tax department has raised concerns over the delay in processing the refund cases and the authorities have been asked to expedite the exercise," a government official, who refused to be identified, said.
The government wants to finish the process by March 31.
The Comptroller and Auditor General of India had said in its report that the government has refunded Rs 57,101 crore in 2009-10, which includes an interest amount of about Rs 12,951 crore - nearly 30%.
In 2008-09, the amount of actual refunds saw a decline while interest payments increased, reflecting the delay in clearing claims.
The CAG report also revealed that the pendency rate for tax refund claims has gone up to 40.4% in 2009-10 from 22.5% in 2005-06.
"We will work closely with the government in clearing income tax refunds and the exercise would get priority," said G Ramaswamy, president, ICAI.
In India, the average time taken for processing income tax refund claims is about 10 months. Any taxpayer, who has paid income tax in excess of the amount due in a given year, is eligible for a refund.