CAG report on Direct taxes

Highlights

The Comptroller and Auditor General of India conducts the audit of receipts of the Union Government under section 16 of the Comptroller Auditor General of India (Duties, Powers and Conditions of Service) Act, 1971. This Report primarily discusses compliance to the provisions of the Income Tax Act, 1961 and the associated rules, procedures, directives etc. as applied to all aspects related to the administration of direct taxes. The report is organised into seven chapters, the highlights of which are described below:

Chapter I: Direct Taxes Administration

Direct taxes receipts of Union Government in FY 2016-17 amounted to Rs 8,49,801 crore grew by 14.5 percent over the FY 2015-16 (Rs 7,42,012 crore). Direct Taxes represented 5.6 percent of the GDP in FY 2016-17. Share of direct taxes in gross tax revenue decreased to 49.5 percent in FY 2016-17 from 51.0 percent in FY 2015-16.

Of the two major components of direct taxes, collections from Corporation Tax increased by 7.0 percent, from Rs 4.53 lakh crore in FY 2015-16 to Rs 4.85 lakh crore in FY 2016-17. Collections from Income Tax increased by 21.5 percent from Rs 2.80 lakh crore in FY 2015-16 to Rs 3.41 lakh crore in FY 2016-17.

The number of non-corporate assessees increased from 3.98 crore in FY 2015-16 to 4.37 crore in FY 2016-17, registering an increase of 9.8 percent. The number of corporate assessees increased from 6.9 lakh in FY 2015-16 to 7.1 lakh in FY 2016-17, registering an increase of 3.6 percent. Out of total 9.2 lakh scrutiny assessment cases, the Income Tax Department had disposed off 4.0 lakh cases (44.0 percent) in FY 2016-17. The disposal rate was 48.1 percent last year.

There has been a significant reduction in the pendency of direct refund cases over the years from 28.9 percent in FY 2012-13 to only 10.7 percent in FY 2016-17.

The arrears of demand increased from Rs 8.2 lakh crore in FY 2015-16 to Rs 10.4 lakh crore in FY 2016-17. The Department indicated that more than 98.6 percent of uncollected demand would be difficult to recover.

Number of appeals pending with CIT (Appeals) increased from 2.6 lakh in FY 2015-16 to 2.9 lakh in FY 2016-17. The amount locked up in these cases was Rs 6.1 lakh crore in FY 2016-17. The amount locked up at higher levels (ITAT/High Court/Supreme Court) increased from Rs 3.0 lakh crore (70,371 cases) in FY 2015-16 to Rs 4.4 lakh crore (82,806 cases) in FY 2016-17. 

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