The present fiscal year is likely to be a watershed for income tax compliance and the tax department is returning the favor with quick refunds. The income tax department published refunds to 24 million taxpayers on December 30, a 53% rise from the year ago, refuting speculation that these may be delayed as the government tries to meet the fiscal deficit target.
In terms of value, Rs 1.31 lakh crore has been paid out in refunds so far, up 17.02% over the same period in the previous year. Before, refunds would taper off in the second half of the financial year as governments cut back on outgo to meet the fiscal deficit target. The government has budgeted a fiscal deficit of 3.3% of GDP for the current fiscal year. At the end of November, the fiscal deficit had already touched 114.8% of the full-year estimate, triggering concerns about a breach of the aim. There has been speculation that the government will delay subsidy payments and slow down refunds to meet the goal.
The online submission and processing of income tax returns have also assisted speed up refunds. “This is highest ever issuance of refunds… The department’s emphasis is on the timely issue of refunds,” said a Central Board of Direct Taxes official. Income tax filings have also hit a record in the present fiscal year with the total so far up 43% at 62.1 million up to December. The government expects income tax returns to touch 70 million this year. The highest number of filings are of ITR-1, the simplest income tax return form, at 30 million.