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Compliance
Direct Tax

Report No. 10 of 2014 - Compliance Audit on Direct Taxes Union Government, Department of Revenue

Date on which Report Tabled:
Fri 18 Jul, 2014
Date of sending the report to Government
Government Type
Union
Union Department
Direct Tax
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Sector Taxes and Duties

Overview

This Report discusses trends, composition and systemic issues in direct taxes using data from Finance Accounts, departmental accounts, departmental MIS and findings of compliance audit.Gross tax receipts (GTR) of Union Government in FY 2012-13 was Rs.10,36,460 crore which represented 10.25 per cent of the GDP. Share of direct taxes in GTR decreased from 55.16 per cent (Rs.3.34 lakh crore) in FY 2008-09 to 53.93 per cent (Rs.5.59 lakh crore) in FY 2012-13.Two major components of Direct taxes viz. Corporation Tax increased from Rs.2.13 lakh crore in FY 2008-09 to Rs.3.56 lakh crore in FY 2012-13 and Income Tax increased from Rs.1.06 lakh crore in FY 2008-09 to Rs.1.97 lakh crore in FY 2012-13.

Voluntary compliance declined for corporate assessees from 83.1 percent to 77.5 per cent; however, it increased for non-corporate assessees from 87.0 per cent to 92.4 per cent during FY 2008-09 to FY 2012-13.We noticed that the actual collection of direct tax exceeded the budget estimates in FY 2009-10 and FY 2010-11. The revised estimates were found realistic in all years as variation in actual collection ranged from (-) 3.23 per cent to zero per cent of revised estimates.

The revenue forgone on account of tax exemptions is increasing in absolute terms over the years (except FY 2010-11) but tax expenditure as a percentage of GDP, Direct Taxes and GTR is declining.The uncollected demand increased from Rs.2.01 lakh crore in FY 2008-09 Rs.4.86 lakh crore in FY 2012-13. The Department indicated that more than 96 percent of uncollected demand is difficult to recover in FY 2012-13.Scrutiny assessments pending for disposal decreased to 2.8 lakh in FY 2012-13 from 4.1 lakh in FY 2011-12. Out of total 5.9 lakh scrutiny assessment cases, the Department had disposed of 3.1 lakh (51.9 per cent) cases in FY 2012-13.Appeals pending with CIT(A) increased from 1.58 lakh in FY 2008-09 to 1.99 lakh in FY 2012-13. Only 85,049 appeals (29.9percent) were disposed of by the CIT(A) in FY 2012-13. The amount locked up in appeal cases with CIT(A) was Rs.2.59 lakh crore in FY 2012-13.We noticed that the number of pending direct refund cases has come down from 15.5 lakh in FY 2008-09 to 11.2 lakh in FY 2012-13.

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