Income Tax Collections May Fall Due to the Outbreak of COVID-19

It is expected that the Income Tax Department will be losing approx 10% of the total income tax collections due to the outbreak of Covid-19. The department is expected to recover INR 10 lakh crores to INR 10.5 lakh crores against its actual target of INR 11.6 lakh crores. The department has already collected a total of INR 9.8 lakh crores by 28th March 2020. The amount is approximately 84% of the total projected collections. A source in the department said, “The department may reach around 90-92 percent of collection as compared to the revised target. Then, there will be a major shortfall in tax collection.”

Mumbai was the biggest contributor of tax contributing 33% of the total tax collections but this year the percentage has dropped down to a new low of 20% up to now. The target was to collect INR 3.76 lakh crores from Mumbai alone but the actual collection was of INR 3.04 crores. The reduction in the collection is expected to reduce even more in the coming days.

A senior I-T official said, “COVID-19 started in the last week of February and impacted major operations of Maharashtra from the first week itself. So, corporates have not come for advance tax due The complete guide to advance tax along with payment calculation, due dates and guidelines. We describe the advance tax payment calculation formula for easy learning. Read more to the fear of projection of loss in this month. They may file tax at the time of income tax return”.

Another source in the department said, “We have to see that the economy is not doing well. Despite that, the department has increased refunds. In 2020, the department has given a refund of Rs 1.83 lakh crores which is higher by 14 percent as compared to 2019. Even in Mumbai itself, the refund amount increased by almost 25 percent”.

The Central Board of Direct Taxes (CBDT) was expecting that huge amounts of tax will turn up against the ‘Vivad se Vishwas bill Know about the tax dispute settlement scheme (Vivad se Vishwas Bill) under the IT act. Under this scheme, taxpayers can settle all disputes before the end of 30th June 2020. Read more‘ but it has not received that much collections as it had expected even after extending the deadline by three months. The officials and the government were expecting large amounts of tax under the scheme, even greater than that of public sector undertakings but nothing has happened according to the expectations.