Interest on delayed I-T refunds cost CBDT Rs 58,000 crore in 9 years

NEW DELHI: The Central Board of Direct Tax has incurred an expenditure of over Rs 58,500 crore in the last nine years only on interest paid to individuals and corporates for delayed refunds of excess income tax paid to the department.

The comptroller and auditor general, in its report tabled in Parliament on Tuesday, has criticised the CBDT and the revenue department in the finance ministry for not making budgetary provisions for the interest to be paid on delayed refunds and incurring such expenditure without the approval of Parliament.

“As in the past, no budget provision for interest on refunds was made in the budget estimates for the financial year 2016-17 and expenditure on interest on refunds amounting to Rs 2,598 crore was incurred by the department in contravention of provisions of the Constitution and in disregard of the recommendations of the public accounts committee,” CAG observed.

It said an expenditure of Rs 58,537 crore on interest payments had been incurred over a period of last nine years without obtaining approval of the Parliament through necessary appropriation.

The CBDT, however, informed the CAG that on the basis of opinion of the attorney general “holding the current practice of treating interest on refund as reduction of revenue and with the approval of the ministry of finance, recommendations of the PAC were not accepted”.

The CBDT classifies interest on refunds of excess tax as reduction in revenue. However, successive CAG’s audit reports have commented on this incorrect practice and observed that the department has failed to take any corrective action.

The CAG pointed out: “Article 114(3) of the Constitution stipulates that no money shall be withdrawn from the Consolidated Fund of India except under appropriation made by law. Payment of interest on refunds of excess tax is a charge on the Consolidated Fund and is, therefore, payable only after having been authorised under due appropriation made by law.”