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Tax officials to go slow on refunds
March, 19th 2007

While e-filing of returns, at least by corporate tax payers, was expected to pave the way for faster refunds, the story is much the same and this time the game of passing the buck is being played.

Tax officials in the field offices say the Central Board of Direct Taxes (CBDT) has instructed them to go slow on issuing refund cheques.

But CBDT spokesperson A K Sinha denied any such missive. "We have instead asked all officers to ensure that cheques are handed out by March,"he said.

He may not be technically wrong since the refund cheques would indeed be dispatched before the end of the financial year on March 31.

Officials in the field offices in Mumbai, which generates the maximum revenue for the government, say that cheques for all those whose tax refunds are pending, the pay-back procedure will start around March 28 so that the amount is actually credited in the bank account in the first week of April, which is the next financial year.

So, all the corporate tax payers who have refund claims of Rs 25 lakh or individuals with refunds of over Rs 1 lakh will help the government show better than budgeted tax collections.

"While the individual assessee is not being denied any claims, some of the large companies may have to wait for a few extra days,"admitted a North Block official, adding that this could add up to Rs 5,000 crore to Rs 7,000 crore.

But it's not a sob story across the country. While cities like Hyderabad have reported that there were no refund claims pending, companies and individuals in Mumbai and Delhi, which account for over 50% of the revenue collections, are complaining the most.

In certain cases, refund claims that had been dragging on for 14 years or so have been cleared, an official said.

The go-slow on refunds comes despite soaring collections and little evidence - at least so far - of the revenue department falling short of the revised direct tax collection target of Rs 229,000 crore.

For instance, most of the top 100 taxpayers in Delhi have paid advance tax that is nearly 50% higher than what they paid last year. Even on customs, the government may end up overshooting the target of Rs 81,800 crore, while service tax collections are on course to meet the revised estimates of Rs 38,169 crore.

In fact, the transfer of refund bill to the next financial year is said to be one of the reasons for projecting a 16.7% rise in direct tax collections when the mop up has risen much higher in the last few years.

Besides, officials said, it may not be possible to grow so fast every year. This year, the government is also hoping for an unprecedented increase since it will benefit from the impact of two assessments during the same financial year.

The overall buoyancy in the economy, reflecting in higher incomes, and the steps initiated by the finance ministry to clamp down on evaders have helped the Centre show unprecedented growth in tax collections. Excise duty has been the only laggard this year.

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