The income tax department has resumed "normal refund payments" for 2011-12 after an informal goslow advisory was reversed.

At the same time, the offices have been asked to expedite refunds of up to Rs 50,000 for the last financial year although the bulk of tax returns were received by August 5. The move is aimed at ensuring that individual taxpayers are not adversely affected by any delays in refunds. Sources said the green light for all refunds has come from the highest level with field offices instructed to clear pending dues. The move comes after TOI highlighted how the revenue department had suspended refunds of over Rs 1 lakh for 2011-12 in the wake of a pressure on tax collections.

Every year, the I-T department is saddled with a huge refund burden, which is in excess of Rs 70,000 crore during some financial years. While a part of the refund is on account of excess tax paid by individuals and companies, a large part of the burden is due to pressure from the tax department on the corporate sector to pay additional sums to help officers meet the targets set for them. Such instances were especially high during the last financial year when the government was keen to ensure that the fiscal deficit was within the target of 5.2% of GDP set by the finance minister.

In the Budget, finance minister P Chidambaram has provisioned for over 18% growth in gross collections of corporation tax, personal income tax and wealth tax. But officials in the department admit that it is a tough ask. "There is a complete disconnect between the economic situation and the tax target. When the economy is growing at 4.4%, how do you expect me to meet the target?" said a senior officer, who did not wish to be identified.

Latest data released by the finance ministry showed that gross direct tax collections rose over 13.3% to Rs 1.57 lakh crore during April-July 2013, compared to Rs 1.39 lakh crore a year ago. From a 21% increase in gross collections during April-May , the growth rate moderated to 11.5% during the June quarter.

Green signal

Every year, the I-T Department is saddled with a huge refund burden, which is in excess of 70,000 crore during some financial years

While a part of the refund is on account of excess tax paid by individuals and companies, a large part of the burden is due to pressure from the tax department on the corporate sector to pay additional sums to help officers meet the targets set for them

Latest data released by the finance ministry showed that gross direct tax collections rose over 13.3% to 1.57 lakh crore during April-July 2013, compared to 1.39 lakh crore a year ago.