Parl panel for including interest on the tax refund in Budget
A Parliamentary panel has asked the government to make indication of interest on the tax refund in the Budget so that there is greater transparency in financial administration of the country.
New Delhi: A Parliamentary panel has asked the government to make indication of interest on the tax refund in the Budget so that there is greater transparency in financial administration of the country.
"In their considered view reporting of interest liability to Parliament would being greater transparency in financial administration of the country, uphold the constitution, help reduce interest burden and bring efficiency in tax administration," Public Accounts Committee said in a report tabled today.
The panel headed by senior BJP leader Murli Manohar Joshi said there is no valid ground as to why the Tax Department cannot make broad estimates of interest liability on tax refunds based on the studied trends of the past.
Moreover, it said the Constitution and the financial procedure provides for additional or supplementary grants.
Citing example, the report said "during the year 2001-02 under Demand No-34- Direct Taxes, a provision of Rs 92 crore was made under the head 'Interest On Refunds of Excess Tax', a practice which needs revival."
The PAC report is based on the findings of the Comptroller and Auditor General of India (C&AG) relating to expenditure incurred on interest on refunds of taxes.
The Committee noted that the Department of Revenue incurred an expenditure of Rs 37,365 crore in interest on refunds alone in four years (2006-07 to 2010-11).
When the amount of tax paid exceeds the amount of tax payable, the assesses is entitled to a refund of the excess amount. Simple interest at the prescribed rate is payable on the amount of such refund.
The committee has asked the Finance Ministry to work out a proper accounting procedure in conformity with constitutional provisions and financial rules.
"The Committee would like to be apprised of the corrective action taken by the government to ensure that suitable administrative procedure is devised in accordance with the Constitution and the Financial Rules within three months of presentation of this report," it said.