Govt to write off Rs 92,000 cr tax arrears

MUMBAI: Owe a lakh or so to the income-tax (I-T) department? For once, you may be let off the hook. The finance ministry has decided to write off a significant portion of tax arrears—about Rs 92,000 crore—owed to the government, as it has realised that this entire exercise of carrying forward these irrecoverable arrears year after year does not make sense.
The Central Board of Direct Taxes (CBDT) has empowered tax officials to write off arrears under Rs one lakh (specific limits have been set according to the seniority of officers) if they are unable to locate assessees after checking with local police stations, if there are no assets to recover, or if there has been no response to notices sent by the department for a sustained period.Arrears of Rs one lakh can be waived by a three-member committee of commissioners.
The government doesn’t really seem to have a choice in the matter, as a large number of records about the arrears are faulty or incomplete.
Addresses of assessees are missing and names have been misspelt, among other errors, as the records have been copied and carried forward for nearly two decades now. And a large portion of these arrears are locked in litigation, making recovery difficult. There are also several instances where demands have been raised more than once, adding falsely to the outstanding amount of tax. ‘‘It’s clear that the Rs 93,000 crore arrears figure is inflated,’’ said sources.
Writing off these irrecoverable arrears is the first step to a clean-up operation as CBDT is keen to computerise the arrears records by June this year. Tax officials all over the country will now be scanning records of arrears and will make an attempt to track down large defaulters.