| Companies with tax demands locked up in litigation can expect more visits from the revenue department this fiscal. The income-tax department has set itself a hugely ambitious target of recovering Rs 11,700 crore as arrears in 06-07.
The step is aimed at substantially shoring up the fiscal position of the finance ministry, which is scouting for every available resource to meet the expected spike in expenditure on social sector programmes. The additional sum will, therefore, go a long way in keeping the fiscal and revenue deficits within the budget targets. The total arrears of the direct tax department is estimated at Rs 1,17,000 crore.
As per the formula worked out by the Central Board of Direct Tax, the net collectible tax demand as on April 1, 06 is Rs 6,370 crore.
The department expects to recover at least 85% of it or about Rs 5,415 crore this fiscal. The department is also hopeful of collecting another Rs 5,000 crore, which will be 20% of the total demand of Rs 25,000 crore, on demands that would mature in the course of the year.
In addition, the department has also set a target to collect Rs 133 crore in taxes from cases that are in various stages of litigation at the Settlement Commission or Income Tax Appellate Tribunal where recovery has been stayed. For those demands of income tax which have been stayed by the authorities themselves, the target for the fiscal is recovery of Rs 332 crore, or 5% of Rs 6,631 crore.
The lowest recovery target of 1% has been fixed for demands locked in court battles. Of the total Rs 67,825 crore pegged under this head, most are against notified persons, sick companies or companies going for liquidation. Another Rs 184 crore or 4% of the Rs 4,598 crore is expected to come from other tax demands where recovery has not been possible due to some or the other reasons.
The finance ministry has to provide Rs 63,313 crore for social sector plan outlay in 06-07, about Rs 12,000 crore more than the revised estimates for 05-06. The total Central plan outlay has been pegged at Rs 2,54,401 crore, Rs 49,063 crore more than the outlay for the previous fiscal.
At the same time the finance minister is under pressure to meet the FRBM mandated fiscal and revenue deficit targets of 0.3% and 0.5% of the GDP respectively. A projected disinvestment proceeds of Rs 3,840 crore has had to be written off the government books. The net tax revenue for the Centre is expected to be Rs 3,27,205 crore as per the budget estimates.
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