Tax gap shoots to Rs 14,684 cr
CAG blames lack of coordination between I-T department and banks.business Updated: Dec 12, 2010 23:03 IST
The county has been losing a big chunk of revenues over the years in the form of income tax from outward remittances by non-residents, despite logging a steady growth in business and foreign investments.
The Comptroller and Auditor General (CAG) has revealed in its latest report a massive tax gap of Rs 14,684 crore between remittances and tax payments for the financial year 2007-08.
Despite rise of 2.5 times in the quantum of remittances during 2004-08, the tax deduction at source (TDS) collections had dipped during 2005-08.
The tax gap increased by 146% to Rs 14,684 crore in 2007-08 from Rs 5,967 crore in 2003-04.
The CAG has blamed the lack of coordination between the banking sector and tax authorities, and discrepancies in the existing tax administration, for this disparity. "Our computation of the tax gap shows that the tax actually deducted is a miniscule fraction of the collectible tax," CAG said in its report on Friday.
A remitter is required to submit an undertaking and a certificate (C&U), which an authorised dealer (banks) must examine. The report points to the non-reconciliation of C&Us between banks and income tax (I-T) department, which led to non-deduction of Rs 98.7 crore in taxes during 2005-09. Revenue loss