Four million tax arrear cases may get waiver

For the first time ever, the income tax department is thinking of writing off tax arrears in each case where the dues are up to Rs 5,000.

The idea is to cut litigation, lower the cost of collection and prioritising of bigger defaulters. Though writing off will mean the government could lose up to to Rs 600 crore, many of these accounts are anyway not recoverable. There are four million tax arrear cases of under Rs 5,000, older than three years.

Initially, what is being considered is writing off 1.8 mill  ion arrear cases with dues under Rs 100 each. “(This could) then be expanded to cover arrears under Rs 5,000. This will ease a lot of hassle that tax payers go through, beside de-cluttering our database of arrears, which might not even be recoverable,” said an official. About 2.2 million cases are between Rs 100 and Rs 5,000.

TAX WAIVERS
I-T Department mulls writing off small tax arrears

• 1.8 million cases with tax arrears of under Rs 100 will be tackled first
   
• 2.2 million cases, older than three years with tax arrears between Rs 100 and Rs 5,000, might be considered later
   
• The government is considering to give up claims on the reduce litigation, lower cost of collection and prioritise big defaulters cases

“Since these are old cases, they are not even being followed up by the department. In some cases, the defaulter cannot be tracked. The cost of recovery is higher than the pending tax amount in many cases,” another official added.

Meanwhile, the government has decided to expedite refunds of up to Rs 5,000 and also for cases where the arrear amount is up to Rs 5,000.  

In a circular issued recently, the department has said “The refund pendency data has revealed that there are a large number of pending claims of refunds up to Rs 5,000 …for assessment years 2013-14, 2014-15 and 2015-16...the assessing officers be directed to issue refunds expeditiously, without making any adjustment of arrear demands...”

In 2014-15, the Central Board of Direct Taxes issued 13 mn refunds worth a combined Rs 26,663 crore.