A steep increase in tax refunds is as much a reason for the less-than-expected tax revenue collection this fiscal as the slowdown in economic growth. In April-January 2011-12, the income-tax department has given R78,000 crore in refunds, up by R4,000 crore in the whole of the previous fiscal. Pertinently, the government was on a refund drive last year. According to sources, the revenue department asked many companies to pay more advance tax in the previous fiscal to meet its target and these companies are now being paid refunds. This has put pressure on the tax mopup at a time when direct tax target looks difficult.
Source: Financial Express
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