By TIOL News Service

NEW DELHI, DEC 25, 2015: ON the issue of interest payment on refund the CAG has been stubborn in its views and it has done it by putting it in its latest report. The CAG has been of the view that the CBDT does not have the authority to withdraw money from the Consolidated Fund of India under this head but it has been doing so without the Parliamentary nod and in contravention of the Constitutional provisions.

The Report notes that the total outgo under this head was Rs 5000 Cr last fiscal. In the last six ficals, the total sum as interests on reund payments was to the tune of about Rs 43000 Crore.

The CAG Report underlines that since no budget provision for such payment was made, any payment made under this head was not proper and this amounts to violation of Article 114(3) of the Constitution.

The CAG Report points out that since the payment of interest on refund of excess tax paid amounts to a charge on the Consolidated Fund of India, it is to be construed as an expenditure and the Ministry of Finance should take proper approval of the Parliament in this regard.

Also See related article Interest on Tax Refund - Sansad shunned; Perhaps it's time to create 'Refund Fund of India'!

The national auditor is also of the view that the mere provision of interest on refunds in the I-T Act cannot be a valid excuse to override the constitutional requirement.