Para 117 of the 79th report of PAC. - Income Tax - 1208/CBDT

I NSTRUCTION NO. 1208/CBDT Dated : October 4, 1978 In para 117 of the 79th report the PAC has made the following recommendations:- The Committee find that yearly cash collections during each of the years since 1971-72 were on an average not more than 10.5% of the total arrears. There has been no year when Department was able to collect more than the current demand. During evidence the Finance Secretary expressed the view that it would not be correct to say that only cash collections represent the efficiency of the Department. While the Committee concede that not all demands are recoverable instantly, they feel that the present rate of cash collection is quite low. Since cash collections are taken into consideration by Government at the time of preparation of Budget estimates, Department's inability to increase cash collections in the context of the evergrowing need for financial resources has the effect of increasing the incidence of taxation on the people and stands in the way of rationalisation of tax structure. In view of these grave implications, the Committee cannot but stress too strongly the need to prepare a time bound programme for stepping up cash collections in respect of arrears of tax. 2. The figures of cash collection out of arrear demand during the last five years are as under:- (Amount in Rs. crores.) ------------------------------------------------------------------------- Financial year Arrears at the Cash collection end of the during the year previous year ------------------------------------------------------------------------- 1973-74 ................... 790.02 80.27 1974-75 ................... 815.60 74.13 1975-76 ................... 935.96 97.74 1976-77 ................... 993.79 108.69 1977-78 ................... 873.56 94.66 ------------------------------------------------------------------------- It will be seen from the above statistics that the tax collection represents about 10% of arrears outstanding at the end of the previous year which is considered low. Since cash collections go to increase the budget collection, the need for increasing them cannot be over-emphasised. As suggested by the PAC you may kindly prepare a time bound programme for your charge stepping up the cash collections out of demand raised on regular assessments and in particular out of arrears of tax. Special attention should be paid to arrears recovery of which will be by way of cash collection as distinguished from reduction/remission etc. Steps may kindly be taken to ensure that the programme so prepared is adhered to and the cash collection augmented substantially. Action on the lines indicated above may be taken immediately. [F. NO. 385/79/78-IT(B)] Dated : October 4, 1978 Central Board of Direct Taxes