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Tax arrears in Maharashtra have now shot up to a staggering Rs 72,801 crore, prompting the state government to beef up the collection of arrears. The tax arrears are nearly equal to the state’s development programme for 2017-18, which is estimated at Rs 77,184 crore. These arrears, if realised, would have wiped away the state’s fiscal deficit, or gross annual borrowings of the state government, which stood at Rs 50,318 crore. This, in turn, would have reduced the amount spent for servicing the rising debt, which has now risen to Rs 3.71 lakh crore. According to the disclosures made in the budget 2017-18 document, arrears accumulated in the past one year alone stood at Rs 13,085 crore.
With the Goods and Services Tax (GST) regime likely to be implemented from July 1, 2017, these arrears are a massive black hole for the state, admitted sources. Statistics show that about 15 per cent of the total arrears — Rs 10,867 crore — have been pending for more than a decade.
Finance Minister Sudhir Mungantiwar, while presenting the 2017-18 budget to the legislature Saturday, admitted that it was necessary to dispose of appeals and beef up recoveries of arrears before the GST regime kicked in.
Sales tax, which is the state’s highest revenue grosser, accounted for over 70 per cent (Rs 51,000 crore) of the total tax arrears. “The number of appeals filed by dealers under Value Added Tax is significant,” admitted Mungantiwar. “The emphasis is on mobilising additional resources through the recovery of pending tax revenue. It is also hoped to recover pending taxes through amnesty schemes,” declared Mungantiwar. While claiming that an ongoing amnesty scheme for sales tax had resulted in encouraging recoveries, Mungantiwar went on to vest power with the government in writing off interest and penalties in certain cases and also formulate a plan for speedy recovery of arrears. Besides this, three more tribunal benches are proposed to be set up for speedy disposal of appeals. In sales tax matters, amounts locked in appeals currently stand at Rs 35,351 crore.
Further, dangling a carrot to traders, the state increased the time limit to file appeals against tax raised by the sales tax department from four months to six months. The power to remand back ex-parte assessment orders issued by the assessing officer was also provided to the appellate authority. The part payment to be made for seeking stay on recovery notices was also fixed at 10 per cent of the dues or Rs 15 crore, whichever lower.
Directors of a private limited company will now be held liable for sales tax dues of their company. The Central Sales Tax has pending tax recoveries totalling Rs 17,874 crore, whereas arrears in land revenue were Rs 909 crore. Another Rs 974 crore was pending in premiums levied on miners for extraction of major minerals, while Rs 522 crore was pending in electricity duties. Collective arrears in non-tax revenues, meanwhile, stood at Rs 3,074 crore.