Budget 2014 Fact Check: Rs 4 Lakh Crore Tax Claims Stuck

Finance Minister Arun Jaitley, while presenting the first union Budget of the Bharatiya Janata Party-led National Democratic Alliance (NDA) Government, said over Rs 4 lakh crore of tax money is stuck in litigations and before the courts. Jaitley said: “Tax demand of more than Rs 4 lakh crore is under dispute and litigation before various courts and appellate authorities. This is one of the serious concerns of all taxpayers in this country. In order to reduce litigation in direct taxes, I propose to make certain legislative and administrative changes.” Here are the facts: At the

end of the reporting year 2012-13, the total tax revenue raised but not realised on income and expenditure was Rs 4,13,886 crore. This is a huge jump from Rs 2,57,476 crore at the end of the reporting year 2011-12 The break up is as follows: while Rs 1,52,456 crore is due as corporation tax i.e taxes paid by companies, Rs 2,61,430 crore is due as taxes on income other than corporation tax. Here is a detailed look at the numbers:

Full View Full View So, out of the grand total of over Rs 4 lakh crore tax raised, as pointed out by the Finance Minister, over Rs 2 lakh crore has been raised as tax demand on income and expenditure and stuck in dispute within the last two years. And Corporation tax of over Rs 80,000 crore is also stuck in dispute. On the other hand, over Rs 72,000 crore has been raised and there is no dispute on the claims of the Department. Rs 42,000 crore has been raised over the last two years and there is no dispute out of which over Rs 24,000 crore is corporation tax. So, corporation tax is clearly the bugbear of the tax department when it comes to collecting taxes raised but not yet collected. And it seems this is where the Finance Minister’s Budget speech highlighted the fact: “Currently, an advance ruling can be obtained about the tax liability of a non-resident from the Authority for Advance Rulings. This facility is not available to resident taxpayers except public sector undertakings. I propose to enable resident taxpayers to obtain an advance ruling in respect of their income tax liability above a defined threshold. I also propose to strengthen the Authority for Advance Rulings by constituting additional benches. I further propose to enlarge the scope of the Income-tax Settlement Commission so that taxpayers may approach the Commission for settlement of disputes. This would continue to be once in a lifetime opportunity for any taxpayer. “As an administrative measure, I propose to set up a high level committee to interact with trade and industry on a regular basis and ascertain areas where clarity in tax laws is required. Based on the recommendations of the committee, the Central Board of Direct Taxes and the Central Board of Excise and Customs shall issue appropriate clarifications, wherever considered necessary, on the tax issues within a period of two months.” Acche Din, surely, could be ahead for taxpayers!!!