Outstanding tax dues top Rs100 billion as government struggles to raise revenueTaxpayers have appealed to the Department of Inland Revenue and revenue tribunals for a reassessment of their dues.
Even though the government collected income tax dues impressively in the fiscal year 2019-20, the added tax dues from then have increased outstanding dues to over Rs100 billion.
At a time when the government is struggling to meet the revenue target, the government has not been able to recover a huge amount of tax dues.
In the last fiscal year, the government collected revenue of Rs793.78 billion, far less than the target of Rs1.1 trillion.
The highest dues are related to income tax followed by value-added tax (VAT) and excise duty, according to the report.
Of the total dues, the taxpayers have appealed to different agencies including the director-general of the department and the revenue tribunal taxes worth Rs61.40 billion.
Tax dues are created if the taxpayers fail to pay the tax in time. For example, income tax other than tax deducted at source (TDS) needs to be paid thrice in a year—by mid-January, by mid-April and by mid-July self-assessing the tax liability.
In the cases of VAT, it should be paid along with tax details within 25 days after the taxation period, say one month, is over.
“The amount of outstanding tax dues is alarming,” a former official of tax authority told the Post. “At least dues must be recovered from the willful defaulters through all legal means available.”
Officials at the department said that the dues increased because of deferral of tax payment deadline repeatedly in the last fiscal year due to the impact of coronavirus on taxpayers as well as the tax authority failing to send tax inspectors in the field to recover dues.
Since March, the government has extended the payment deadline of tax citing the impact of the Covid-19 on the businesses. The final deadline set for paying the tax was till August 23, this fiscal year.
In the last fiscal year, the tax authority recovered an impressive amount of Rs24.53 billion from taxpayers who had outstanding dues related to income tax. The target was to recover Rs7.32 billion.
When it comes to VAT dues, the tax authority collected Rs5.09 billion against the target of Rs5.97 billion.
“Even though we recovered a good amount of tax dues, there is still a huge amount of dues,” said Mukti Pandey, deputy director-general at the department. “The recovery of the tax dues takes time and dues remains continuously in the tax system.”
According to him, some taxpayers cannot pay the tax at once and the tax authority allows such taxpayers to pay the dues in instalments.
“Some taxpayers, however, run away from their duty to pay tax and we freeze their properties to recover the dues. It also takes time to recover the dues from those who appeal against tax determination by the tax authority,” Pandey said.
According to Pandey, recovery was also affected due to Covid-19 pandemic as the tax officials failed to go to the field. “We could also determine tax liability on more taxpayers which could help tax recovery but it could not happen due to pandemic,” he said.
In order to collect the outstanding tax dues, the tax authority in fiscal year 2018-19 had taken a number of measures including freezing bank accounts, barring several businesses from operating their export-import businesses and restricting some defaulters’ ability to travel abroad.
Last month, tax authorities told nearly 30,000 firms that have failed to submit details of value-added tax they collected to clear the dues of up to mid-July 2018 or else face de-registration.
The Inland Revenue Department on Friday released a list of 29,447 firms registered to collect value-added tax on goods and services they sell but who failed to submit details and deposit their collections accordingly.
As per the section 21 (3) of the Financial Act 2020, the tax authority has asked these taxpayers to submit the tax details and pay the tax including 50 percent fine on the top of the tax dues by mid-March next year.
Earlier this week, the tax authority also announced a similar scheme for the income taxpayers who had failed to submit tax details and taxpayers. As many as 280,638 taxpayers can benefit from it with a waiver of fee and interest.