'Difficult To Recover 67% Of Direct Taxes Worth ₹43 Lakh Crore Due Across Country,' Says Income Tax Dept

The Income Tax Department is grappling with an alarming backlog of direct tax arrears, with a staggering Rs 29 lakh crore deemed practically unrecoverable, according to official submissions to the Parliamentary Standing Committee on Finance.

The parliamentary committee was informed by the Income Tax Department that it is difficult to recover 67 percent of the direct taxes of Rs 43 lakh crore due across the country. 

Claim Made By The Revenue Secretary

The Revenue Secretary, Ministry of Finance has claimed that a large portion of the tax arrears was impossible to recover. “A large portion of the tax arrears amounting to Rs 10,55,906 crore has been pending for five years or more. Out of the arrears of Rs 43,07,201 crore, Rs 28,95,851 crore (67%) is almost impossible to recover,” states the Revenue Secretary report to the Parliamentary Committee. 

The Committee has recommended writing off demands/ imposing moratoriums

The Central Board of Direct Taxes (CBDT) acknowledged arrears of Rs 43,00,000 crore largely related to old cases and some the amount is outstanding since the mid-1990s when manual records were maintained. “Partly, this is a legacy issue. These arrears pertain to mid-90s because earlier, what used to happen was that there were essentially manual registers that we were keeping,” said the CBDT to the Parliamentary Standing Committee. 

The Committee expressed their concern over the present scenario and said that there is a pressing need to review the tax assessment system to make it more efficient in collection of taxes.

The massive unrecoverable tax arrears represent a significant loss of potential revenue for the government.