Cost of Collection about 0.6%

Income Tax - Cost of Collection about 0.6%

• COST of collection showed a uniform trend of about 0.6 per cent during 2006-07 to 2010-11 except 2008-09 and 2009-10, where it was 0.7 per cent.

• The direct tax collection exceeded the budget estimates in all the years over the period 2006-07 to 2010-11 except 2008-09. The extent of actual collection exceeding the budget estimates ranged from 2.2 per cent in 2009-10 to 16.7 per cent in 2007-08.

• Direct tax collection increased by 94.2 per cent from Rs. 2,30,181 crore in 2006-07 to Rs 4,46,934 crore in 2010-11 whereas total Gross Domestic Product (GDP) has increased by 90.0 per cent from Rs. 41,45,810 crore in 2006-07 to Rs. 78,75,627 crore in 2010-11 indicating a significantly higher growth rate of tax collection over five years period. During the period 2006-07 to 2010-11, the average rate of growth of direct tax collection was 23.6 per cent. The annual rate of growth ranged from 6.9 per cent in 2008-09 to 35.6 per cent in 2007-08.

• In the case of the corporate assessees, net collection increased from Rs. 1,44,318 crore in 2006-07 to Rs. 2,98,687 crore in 2010-11 at an average annual rate of growth of 26.7 per cent and in the case of non-corporate assessees, net collection increased from Rs. 75,079 crore in 2006-07 to Rs. 1,40,042 crore in 2010-11 at an average annual rate of growth of 21.6 per cent.

• Voluntary compliance by assessees (pre-assessment stage) accounted for 81.4 per cent of the gross collections in 2010-11. The collection by way of voluntary compliance in 2010-11 was higher than 2006-07 but marginally lower as compared to 2007-08 to 2009-10.

• The assessee base grew over the last five years from 313 lakhs taxpayers in 2006-07 to 335.8 lakh taxpayers in 2010-11 at average annual rate of growth of 1.8 per cent.

• The pendency of scrutiny assessments increased from 2.8 lakh in 2006-07 to 3.9 lakh in 2010-11.

• At the end of 2010-11, as much as Rs. 2.9 lakh crore remained uncollected. This comprised demand of Rs. 2.0 lakh crore of earlier years and current demand (2010-11) of Rs. 0.9 lakh crore.

• Internal Audit completed 66 per cent of the targeted audits. Only 14.9 per cent of major findings raised by Internal Audit were acted upon by the assessing officers in 2010-11. Departmental response to Internal Audit was clearly inadequate.

Source: CAG's Report No. 27 of 2011-12 (Direct Taxes)