Pending cases: Over Rs three lakh crore tax amount stuck in litigation

Even as the Income Tax department has warned against tax evasion, a government estimate has pegged the share of arrears locked in litigation at more than 85 per cent.
Over 2.40 lakh cases related to direct tax and about 1.18 lakh related to indirect tax are pending. Officials say only a small portion of all arrears is actually collectable.
Over 2.40 lakh cases related to direct tax and about 1.18 lakh related to indirect tax are pending. Officials say only a small portion of all arrears is actually collectable.

NEW DELHI: Even as the Income Tax department has warned against tax evasion, a government estimate has pegged the share of arrears locked in litigation at more than 85 per cent.

More than Rs 3.2 lakh crore as tax amount is stuck because of lakhs of pending cases in courts, according to the department.

Over 2.40 lakh cases related to direct tax and about 1.18 lakh related to indirect tax are pending. Officials say only a small portion of all arrears is actually collectable.

Considering the collectability of arrears under different categories, the government sets a target every year for the recovery of outstanding taxes, and closely monitors the progress by the field authorities.

As far as direct taxes are concerned, 33,554 cases are pending for more than five and less than 10 years, while 4,230 are more than 10 years old.

“Comparing the total pendency of arrears with actual recoveries to arrive at a success percentage of arrears recovery is like comparing the incomparable because more than 85% of pendency is locked up in litigation/restraint, which is not recoverable till the judicial fora takes a final decision, which takes more than five years in most cases,” the Centre said in a recent reply in Parliament.

Strategies and targets for recovery of arrears of taxes are laid down as part of the annual Central Action Plan document, said officials. A new reward scheme for information leading to recovery of arrears has also been notified.

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