By Taxindiaonline News Service

NEW DELHI, AUG 8 : ON the income tax refund front the Finance Minister, Mr Jaswant Singh, no doubt, deserves tons of kudos for showing exemplary patience and extraordinary commitment to clear all the backlogs of refunds in this fiscal! Even as the CBDT bosses are rightly in a state of panic as their net mop-up in the first quarter is down by more than Rs 600 crore as compared to last year collections, leave aside the 20 per cent growth envisaged this fiscal, the FM is evidently holding on to the pace at which refunds are being cleared. So far refunds to the tune of Rs 15,000 crore have been given away!

CBDT officials say that at this pace the total refunds in the current fiscal are going to be to the tune of Rs 30,000 crore. Given that it had touched about Rs 23,000 crore last year, the projected figure is not too high, considering that even disputed and lost refunds are also being cleared in favour of the taxpayers.

For instance, if a refund letter has been issued to a taxpayer but the cheque never reached him and the case has been pending for several years, the Members are ensuring that no matter whether the income tax department has any records or not if the taxpayers have the necessary original document the refunds should be given on the basis of an affidivit. As old as 1994 cases have also been cleared recently by the Delhi income tax. All one has to do is to dig out one's original letter and sign an affidivit and give it to the income tax department and collect one's cheque.

The only inherent danger in this exercise is that some fradulent elements in connivance with the income tax officials themselves like the one which was busted recently by the CBI in Haryana and Punjab in TDS cases, may forge certain documents and reap the benefits of this bonanza. Given the prevailing spirit of sanctioning refunds, no official is taking extra pain to verify the authenticity of documenmts as they fear complaints against them. If certain cases of this nature are sanctioned it would indeed be very difficult to trace them as they would lost in the mountains of refunds papers.

But it is a hazard which cannot be wished away if the political bosses decide to do some good work. Yet another good work which the MoF is going to do is to link the interest on refund to the prevailing rates of treasury bills. This will go a long way in dissuading large corporate from parking funds with the exchequer which has to shell out huge interest on it after a year and also suffers some illusions about the actual collections figures!

But what may help the CBDT reduce the possible deficit between the budget targets of Rs 95,000 crore and the actual collections minus whopping refunds is a bit of extra efforts to put Mumbai back on rail. So far Mumbai has shown very poor collections. But here the FM will have to sacrifice his determination to dilute the search and seizure dimension of the department which is in any case a wrong strategy. Fear must lurk like a sword of Damocles for better tax compliance behaviour. If raids go down in number and tax sleuths feel demotivated, it is certainly not a good portent for future growth of income tax.