New Delhi: The income tax department is going slow on several refunds of over Rs 1 lakh for 2011-12, amid slowing revenue growth due to the faltering economy. While the government has not issued any directives to the revenue officers to go slow on tax refunds, the indications are strong enough to ensure that refunds above Rs 1 lakh are not issued in a hurry, several tax officials TOI spoke to said on condition of anonymity.
At least three top officials in the income tax department’s field offices confirmed the go slow on refunds, the revenue department and CBDT did not respond to questionnaires sent three weeks ago. A slowing economy and decline in business confidence has hurt revenue receipts. While the government is confident of meeting the tax targets set for the current financial year, revenue officials say the initial months have been tough.
Latest data released by the finance ministry showed that gross direct tax collections rose over 13.3% to Rs 1.57 lakh crore during April-July 2013, compared to Rs 1.39 lakh crore a year ago. From a 21% increase in gross collections during April-May, the growth rate moderated to 11.5% during the April-June quarter. The officials said the informal advisory to suspend refunds of over Rs 1 lakh was effective from June.
As a result, the growth in net tax collections, which was estimated at 6.4% in during April-May and April-June, shot up to 10.4% at the end of July. The government did not release the data for April and the revenue department did not share the data on refunds.
In the budget the finance minister has budgeted for over 18% growth in gross collections of corporation tax, personal income tax and wealth tax.
Growth has slowed to a decade low of 5% in 2012- 13 and the economy is expected to remain sluggish in the current financial year too, raising fears over the government’s ability to meet the fiscal deficit target of 4.8% of GDP. Corporate profitability has also taken a hit due to the slowing economy, which could hurt government’s revenue collection drive. finance Minister P Chidambaram has said that government will meet the fiscal deficit target of 4.8% and will not breach the “red line.”