June 10, 2023

The CBDT has issued a circular to all income tax officers across the country just before the end of the financial year to shore up the collection of tax as it was way behind the revised projections. Neena Kumar, CBDT Member (Revenue) who signed the letter, informed them about the huge shortfall in projected direct tax collections for this fiscal and asked them to take “all possible actions urgently, especially with respect to recovery of arrears and current demand, so as to achieve the targets for collection.” It was mentioned in the memo that only Rs 10,21,251 crore, or 85.1% of the projected Rs 12,00,000 crore had been collected till March 25.

This kind of pressure being created on field officers, though not a first-time occurrence is obviously not good for many reasons. That this is the result of setting unreasonable projections in the first place is even more disconcerting. The department had known that projections will fall way short and had started taking many steps, including calling up big taxpayers, to cough up more. But this is against ethics. Why a taxpayer should be harassed if he or she is paying what is due? Does the department think that those who honestly pay taxes can be pressurized further just to meet projections? In several cases, it has come to light that officers have requested assesses to pay extra and claim a refund after assessment.

Even the professional bodies are up in arms against such tactics. Five associations of chartered accountants have already issued a release that calls upon the Prime Minister and the finance minister to instruct the CBDT and income tax officers not to harass tax papers just to make up the shortfall in projections. They have pointed out that “arrears” as mentioned in the CBDT letter could mean anything from disputed amounts to rectification not done after an appeal to correction not made for order passed in favour of the taxpayer. If now, acting on the CBDT memo, the officers were to badger the taxpayer to cough up these sums, it would amount to unreasonableness, unfairness and injustice.

The income tax department should stop demanding more from taxpayers who are already paying taxes honestly. Business does not grow as per projections each year in this age of extreme competition. Instead, despite the happiness about the growing tax base post demonetization, there are lakhs of businesses and professionals who either under report their earnings or even escape the tax net altogether. Hence, instead of being complacent, the department must make all efforts to further widen the tax net. Finally, projections for direct tax collections must be made at conservative estimates and last minute harassment of taxpayers should be avoided at all costs.