Compliance
Direct Tax

Report No. 26 of 2010-11 - Compliance Audit Report on Direct Taxes, Union Government

Date on which Report Tabled:
Fri 18 Mar, 2011
Date of sending the report to Government
Government Type
Union
Union Department
Direct Tax
Sector Taxes and Duties

Overview

Direct tax collections increased from RS 1,65,216 crore in 2005-06 to RS 3,78,063 crore in 2009-10 at an average annual rate of growth of 32.2 per cent. The rate of growth of tax collection has decelerated in 2008-09 and has since marginally improved in 2009-10.Tax-Gross Domestic Product (GDP] ratio increased from 4.6 per cent in 2005-06 to 6.1 per cent in 2009-10. However, there was a slight decline as compared to 6.6 per cent in 2007-08. For every unit growth in GDP, direct taxes grew from 1.7 per cent in 2005-06 to 2.6 percent in 2007-08. The buoyancy slowed down to 0.8 per cent in 2009-10 through 0.5 per cent in 2008-09. The decline in buoyancy is a matter of concern.

The assessee base grew over the last five years from 297.9 lakh taxpayers in 2005-06 to 340.9 lakh taxpayers in 2009-10 at the rate of 14.4 percent.Voluntary compliance by assessees (pre-assessment stage) accounted for 82.8 per cent of the gross collections in 2009-10. Only 65 per cent of the total demand raised in 2009-10 was collected registering a decline as compared to 74 per cent collected in 2007-08.Out of the total 8.7 lakh scrutiny assessment cases, the Department had disposed off 4.3 lakh (49.3 per cent) cases in 2009-10. The pendency of scrutiny assessments increased from 45.7 per cent in 2005-06 to 50.7 per cent in 2009-10.

The certified demand remaining uncollected was RS 95,122.4 crore(96.6 per cent) in 2009-10 as compared to RS 27,461 crore in 2008-09 registering an increase of 246.4 per cent.Total cost of direct tax collection increased to 0.73 per cent in 2009-10 mainly due to increase in establishment cost. The Government refunded RS 57,101 crore including interest of RS 12,951 crore (22.7 per cent) in 2009-10. Interestingly number of pending direct refund cases has gone up from 5.7 lakh in 2005-06 to 19.4 lakh in 2009-10.

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