The Central Board of Direct Taxes (CBDT) has instructed heads of departments (HODs) to limit key expenses, failing which certain future expenses may not be sanctioned. The move comes as part of a larger cost-cutting exercise by the Centre. Expenditure on legal matters, write-off losses, repair and maintenance costs, rewards to informants, staff bonuses, as well as expenses on vehicles, stationery, and advertising are some that have been cited. Tax officials see the instructions as austerity measures.
HoDs (commissioner rank and above) are allotted up to Rs 60-90 lakh (varies region-wise) per annum, for outsourcing of services.
A letter issued on Tuesday stated: “Several instances have come to the notice of the CBDT, wherein the official memorandum has not been followed and HODs have sanctioned expenditures on ‘outsourcing of services’ beyond their delegated financial power. This is either by way of entering into a fresh contract or by extending the existing contract. This has, at times, led to litigation between the contractor and department on account of delayed payments for want of sanction of the authority, resulting in levy of interest and cost by courts.”
It further stated that field authorities should not award contracts for outsourcing of services or sanction work beyond the delegated financial power. It also directed submission of proposals on time.
According to the Department of Expenditure, the revenue wings (of both CBDT and CBIC) have been authorised — under the finance ministry’s 2011 memorandum — to decide the extent of financial power that they can delegate to HoDs in the matter of contingent expenses. This will be subject to fiscal codes, procedures, and limits being within budgetary allocations.
All proposals beyond the delegated power of HoDs are to be invariably referred to the ministry for consideration.
As regards sanctioning of work, the letter highlighted that many a time, field authorities altered/added the scope of the originally sanctioned work beyond their power, without prior approval of the competent authority.
Subsequently, when zonal assessing officers refused to clear such bills pending sanction, proposals were sent to the Directorate of Income Tax (Infra) for ex-post facto approval from the competent authority.