The Income Tax Department is grappling with an overwhelming backlog of direct tax arrears, with Rs 29 lakh crore classified as nearly impossible to recover, as per official submissions to the Parliamentary Standing Committee on Finance. The total outstanding direct tax dues stand at Rs 43 lakh crore, of which 67% has been deemed unrecoverable.
Revenue Secretary's Submission on Tax Arrears
According to the Revenue Secretary, a substantial portion of these arrears- Rs 10.55 lakh crore has been pending for more than five years. He emphasized that the backlog includes legacy cases dating back to the mid-1990s when tax records were maintained manually, complicating recovery efforts.
Parliamentary Panel Calls for Action
Expressing concern over the staggering amount of pending tax dues, the Parliamentary Standing Committee has recommended writing off demands or imposing moratoriums on certain cases to streamline the recovery process. It has urged the government to reassess its tax assessment and collection mechanisms to prevent such massive arrears in the future.
Potential Revenue Loss to the Government
The CBDT acknowledged that the massive accumulation of tax arrears represents a significant revenue loss. With a large portion of the outstanding dues unlikely to be recovered, the committee stressed the need for an overhaul of the tax recovery framework to enhance efficiency and ensure timely collections.
This development underscores the challenges faced by the government in addressing tax compliance and enforcement while balancing revenue generation and economic growth.
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