Collection as ratio of arrears down

Collection as a ratio of arrears during 2014-15 has fallen drastically to 1.17 per cent compared to 10.46 per cent in the previous financial year, public auditor CAG has said in a report tabled in Parliament.

"Although, falling ratio of collection of arrears have been repeatedly pointed out by audit, there is no sign of improvement. There is a need to strengthen the recovery mechanism of the department," said the CAG Compliance Audit Report on Indirect Taxes - Service Tax.

The Service Tax collection was Rs 1,67,969 crore during 2014-15 and accounted for 30.75 per cent of indirect tax revenue.

Indirect tax collection as a ratio of GDP has decreased in 2014-15 compared to the previous fiscal, while as a ratio of gross tax revenue, it has increased, the report said. Service Tax revenue as a percentage of GDP has been increasing every year during last four years, though it declined marginally during the financial year ended March 2015.

The report further said it is cause of concern the large number (27,844) of returns marked for detailed scrutiny were pending as on March 31, 2014 as other than cases of fraud. "It is essential that the department takes steps to analyse the reasons for long pendency so as to ensure revenue due to the Government is adequately safeguarded," the CAG said.

The report also observed that a "huge number" of returns were pending for more than two years for detailed scrutiny. "It also appears that the data of age wise analysis of pendency furnished by Ministry is not correct for FY14," it said.