Tax authorities going slow in releasing refund and Cenvat credit

The intention is to maximise revenue collection for financial year ending March 31

In a major revenue drive, the tax authorities across the board are going slow on releasing tax refund and in granting utilisation of Cenvat credit.

According to official sources, tax revenue boards - Central Board off Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC) have directed the field formation to pause tax refunds and utilisation of tax credits for a while to maximise revenue collection for the financial year ending March 31. 

This is important given the resolve of the government to contain the fiscal deficit at 5.3 per cent of GDP in the current year, and bring it down to 4.8 per cent in 2013-14.

The business units utilise Cenvat credit for various taxes paid during manufacture of goods or in rendering a service. Officials said the businesses have been asked to utilise the Cenvat credit facility after March 31. Similarly, tax refunds across boards - customs, central excise, service tax and income tax are delayed to ramp up revenue numbers.

Sources said, income tax refunds, anyway have taken a backseat over the last one year. However, this time the department is stressing on holding Cenvat credit usage by businesses, said sources. A business unit can utilise the Cenvat credit accumulated over a period of three months.

Net direct tax collection grew by 12.49 per cent to over Rs 3.9 lakh crore in the April-January period, less than the budgeted annual target of 15 per cent growth, reflecting the impact of slowdown.

Meanwhile in indirect tax collection, the government had fixed the target of indirect tax collection, comprising customs, excise and service tax, at Rs 5.05 lakh crore for the current fiscal, an increase of about 27 per cent from 2011-12 target. Indirect tax collections have registered a growth of 20 per cent to Rs 4.17 lakh crore in April-February period of the ongoing fiscal.

The excise duty collection during April-February period totalled Rs 1.54 lakh crore, while the customs duty mop-up was at Rs 1.5 lakh crore and service tax collection was Rs 1.13 lakh crore during the period.

In direct taxes, the revenue department has also issued notices to 35,000 assesses for failure to file income tax returns even as the defaulters were given the option to pay taxes and seek penalty waiver. Reportedly, 10,000 assesses, of the 70,000 to whom notices were sent, have disclosed their income and filed taxes on receiving the letter.