Revenue foregone by govt due to tax exemptions double in 5 years
New Delhi: The amount of revenue foregone by the government due to tax exemptions more than doubled from Rs 65,587 crore in 2006-07 to Rs 1,38,921 crore in 2010-2011, a CAG report said on Tuesday.
"We found that the revenue foregone on account of tax exemption has increased by 111.8 percent from Rs 65,587 crore in 2006-07 to Rs 1,38,921 crore in 2010-2011," the report for the year ended March 2011 by the Comptroller and Auditor General (CAG) said.
The main objective of any tax system is to raise revenues necessary to fund government expenditure, it said adding the amount of revenue raised is determined to a large extent by tax base and tax rates.
"The revenue forgone (on account of tax exemption) in respect of corporate taxpayers increased by 73.6 percent as compared to 226.6 percent in respect of non-corporate taxpayers during 2006-07 to 2010-11," the report tabled in Parliament said.
During last five years, it said, direct tax collections have increased from Rs 2,30,181 crore in 2006-07 to Rs 4,46,934 crore in 2010-11, at an average annual rate of growth of 23.6 percent.
In case of corporate assessees, net collection increased from 1,44,318 crore in 2006-07 to Rs 2,98,687 crore in 2010-11, at an average annual growth rate of 26.7 percent, it said.
The report said in the case of non-corporate assessees, net collection increased by 21.6 percent from Rs 75,079 crore to 1,40,042 crore during the period under review.
The report also pointed out that there was a marginal growth in taxpayers during the five-year period.
"We observed that the assessee base grew over the last five years from 313.0 lakh taxpayers in 2006-07 to 335.8 lakh taxpayers in 2010-11, registering an increase of 7.3 percent," it said.
The increase in tax collection was around thirteen times as compared to increase in the tax payers base, the report added.
According to the CAG report, the government refunded Rs 75,169 crore which includes interest of Rs 10,499.4 crore (13.9 percent) from gross collection of Corporation and Income Tax of Rs 5,13,898 crore in 2010-11.
"The interest paid on refunds in 2009-10 was Rs 6,876 crore (12 percent of Rs 57,101 crore refunded) out of the gross collection of Corporation and Income Tax of Rs 4,24,713 crore," it said.
The report, however, pointed out that the interest on refunds also needs to be seen in the perspective of pendency of direct refund cases which increased from 4.4 lakh in 2006-07 to 19.5 lakh in 2010-11, registering an increase of 343 percent.
Finance Minister Pranab Mukherjee, in his budgetary proposals, had estimated Gross tax receipts for 2012-13 at Rs 10,77,612 crore, an increase of 15.6 percent over budget estimates and 19.5 percent over the revised estimates for 2011-12.
Also, the government's total expenditure for 2012-13 is targeted at Rs 14,90,925 crore-- Plan expenditure of Rs 5,21,025 crore and non-Plan expenditure of Rs 9,69,900 crore.