The government’s already muted tax collections are set to take a further hit, with central excise and service tax officials now threatening to hand out mass resignations for delay in promotions. Income tax officers have already refused to stop work and issue assessment orders over the same issue.

A stir by officials from both direct and indirect tax departments at a time when the government was going after tax evaders may jeopardize the finance ministry’s efforts to meet its tax collection targets. The mop-up is expected to fall short of the Budget Estimates, putting further pressure on fiscal deficit.

“All the Superintendents of Central Excise & Service Tax will tender their resignations on April 30 being fed up of no promotions, lower salary and lack of working conditions,” said Ravi Malik, Secretary General, All India Association of Central Excise Gazetted Executive Officers. Ahead of the Budget, the officers also plan to protest between February 25 and March 1.

On the other hand, the Income Tax Gazetted Officers Association has resolved none of its members would participate in any search and survey action including TDS survey, inspection, verification, study or whatever name called and recovery surveys from February 20, 2013. The Association comprises second rung officials who supervise the overall work of revenue collection across the country.

The revenue department is trying to resolve the issue by negotiating with these associations.

As per the latest data, net indirect tax collections stood at Rs 3,08,919 crore during April-December 2012-13. The Budget Estimate for the year is Rs 5,05,044 crore. This leaves a deficit of about Rs 2 lakh crore which has to be covered in the last three months of the year. The task for the income tax department is equally challenging. Net direct tax collections in April-January this year stood at Rs 3,90,310 crore, whereas the Budget target is Rs 5,70,257 crore.

In order to jack up the collections, the finance ministry started giving warning to the tax evaders to pay up the due tax or face action. Recently, notices were sent to some companies asking why they paid less service tax and excise duty this year when the tax rate had gone up from 10% to 12%. This exercise may get hampered now due to agitation by tax officers.

Though excise and service tax officials said till April 30 they would perform only official duties in relation to Budget and revenue collection, without taking any extra efforts, I-T officers have decided not cooperate in tax recovery drives and abstain from submission of official reports from February 11.

The associations are demanding implementation of cadre restructuring without any cut, promotions, parity with their counterparts in other departments, and upgrade in pay scales among others.