Significant Increase in Income Tax Recovery for Financial Year 2023-24

The Income Tax Department has reported a significant achievement in the recovery of pending dues for the financial year 2023-24, having successfully collected Rs 73,500 crore as of March 15. This marks a notable increase from the previous year’s collection of over Rs 52,000 crore. Out of the total recovered amount, corporate tax dues contributed Rs 56,000 crore, while personal income tax accounted for Rs 16,500 crore. Additionally, undisclosed income from foreign assets made up Rs 50 crore of the recovered sum.

This success is attributed to a focused recovery plan aimed at enhancing the collection of outstanding tax arrears. Although providing year-wise details of outstanding dues poses a challenge, the collection has seen a significant increase. The percentage of annual outstanding collection has risen from an average of eight per cent until 2021-22, to 10.78 per cent in 2022-23, and is now approximately 17 per cent in the current financial year. Pending tax arrears, which stood at over Rs 21.94 trillion as of January 31, 2023, have been a major concern for the tax department, escalating from Rs 15 trillion in April 2021.

Efforts are underway to update the database to ensure accuracy, particularly in cases where taxes were paid but not reflected in the system. These actions align with the department’s commitment to enhancing taxpayer services and maintaining the integrity of the taxation regime.

In an interview with PTI ahead of the Interim Budget 2024-25, Revenue Secretary Sanjay Malhotra emphasized the continuity in the taxation regime and the substantial buoyancy in personal income tax, attributing it to recent benefits provided to taxpayers. He underscored the government’s dedication to improving taxpayer services, focusing on rationalization, simplification, and trust-based taxation. Addressing the non-extension of the concessional tax regime for corporates beyond March 31, 2024, he clarified that companies were given ample time to avail of the benefits, and that the existing taxation rate of 22 per cent for corporates is reasonable given the size of the economy.

Taking all factors into account, Malhotra concluded that the decision for the concessional tax regime to sunset as planned was based on careful consideration.