Finance minister Pranab Mukherjee is likely to introduce in the upcoming Budget some major changes in direct tax laws with huge tax arrears of about Rs 2,50,000 crore that could help in recovery of a significant portion of the arrears.Untill March 31, 2010 the total arrears were Rs 2,30,000 crore, and in the new fiscal year another Rs 20,000 crore has been added to this figure.The tax arrears have almost doubled in the last 2 years to Rs 2.50 lakh crore, almost 66% of the total direct taxes collection of 2009-10.
The matter was discussed by finance minister in a pre Budget review meeting with officials of the Central Board of Direct Taxes last week.CBDT is working on the details to be incorporated in the Budget.
Proposed changes could include reducing the limits to approach Income Tax Settlement Commission.Other changes could include measures to improve settlement mechanism functioning of the direct tax laws,bringing all types of cases under the ITSC and giving a security of tenure to the members of the commission.Pranab Mukherjee acknowledged the role of the settlement commission in reducing litigation with taxpayers and its potential for reducing tax arrears.
To speed up recovery process, IT department has circulated details of at least 550 high worth individuals and entities , who have willfully defaulted or have unpaid tax of Rs 25 crore and above.
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