Govt shells out huge sum in late tax refunds

If only the government had not delayed tax refunds in the past five years, it could have built as much as 3,000 km of highways with the money saved.

If only the government had not delayed tax refunds in the past five years, it could have built as much as 3,000 km of highways with the money saved.

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Tax authorities have coughed up more than Rs 21,000 crore to taxpayers as interest between 2003 and 2008 on account of delays in refunds, while it is bucking up to make sure refunds are not messed up. Officials say legal hurdles often delay refunds.

Under existing rules, the income tax department is bound to pay an interest at the rate of 0.5 per cent per month or 6 per cent annually for delayed tax refunds. The government has asked the Central Board of Direct Taxes (CBDT) to issue refunds within six months of filing of returns.

The information on the large interest outgo was given by the Finance Ministry in response to a Right to Information (RTI) query filed by Delhi resident Devashish Bhattacharya.

As of April 1, 2009, there were 2.35 crore income tax returns pending to be processed. Considering that there are total of 3.15 crore income tax assesses in India at present, the pending cases appear huge.

The government, however, is confident of speeding up mattes as it migrates to a comprehensive computerised system, said a senior ministry official who did not want to be identified.

A pilot project for mass processing of salary returns has already been completed in Mumbai. Based on these, a centralised processing facility has been set up in Bangalore. “To begin with, it will provide speedy processing of returns,” the official said.