Major Increase in Income Tax Recovery for FY 2023-24

The Income Tax Department reported an important achievement in the collection of pending dues for the financial year 2023-24, having collected Rs.73,500 crore by March 15. This represents a significant increase above the previous year’s collection of more than 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. Undisclosed income from overseas assets accounted for Rs.50 crore of the recovered money.

This accomplishment is due to a concentrated recovery approach aimed at increasing the collection of outstanding tax arrears. Despite the difficulty of giving year-by-year details of unpaid dues, the collection has increased significantly. The percentage of yearly outstanding collection has increased from an average of 8% in 2021-22, to 10.78% in 2022-23, and is now about 17% in the current financial year.

The tax administration has been concerned about pending tax arrears, which had risen from Rs.15 trillion in April 2021 to over Rs 21.94 trillion as of January 31, 2023.

Efforts are being made to update the database to ensure correctness, particularly in circumstances where taxes were paid but not recorded in the system. These actions are consistent with the department’s commitment to improving taxpayer services and safeguarding the integrity of the taxation system.

In an interview with the media before the Interim Budget 2024-25, Revenue Secretary Sanjay Malhotra stressed the continuity of the taxation regime as well as the significant increase in personal income tax, which he attributed to recent taxpayer advantages. He emphasized the government’s commitment to enhancing taxpayer services, including rationalization, simplification, and trust-based taxes.

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 things into account, Malhotra determined that the decision to end the concessional tax scheme as planned was made after due study.