Tax arrears to help out Dr T M Thomas Isaac

THIRUVANANTHAPURAM: Finance minister Dr T. M. Thomas Isaac need not have to worry about saddling the public with heavy tax burden. If only he could mop up a percentage of Rs 15,000 crore the state had failed to collect from individuals, companies and PSUs over the years, the huge fiscal stress the state now suffers could be considerably eased.

According to sources in Commercial Sales Tax Department, Rs 15,000 is a conservative estimate. It could be more than even Rs 20,000 crore, much more than the state's revenue deficit of 18,000 crore. In 2013-14, the report of the Comptroller and Auditor-General had revealed that the arrears under just six heads of revenue, including VAT collection, were Rs 7529.67 crore. By March 31, 2015, the CAG report shows that arrears had swelled to Rs 10,435.55 crore, an increase of nearly 40 per cent. Of this, nearly Rs 2000 crore have accumulated for over five years.

Even at this rate of fattening, arrears at the end of March 31, 2016, (for which accounted figures are not yet available) will stand bloated at Rs 14,600 crore. "But the fact is tax collection was most lenient, and stays ordered on collection the most rampant, during the last fiscal of the UDF government," a top tax official said. Which means, the arrears would definitely have accumulated to over Rs 20,000 crore.

Of the conservative arrears of Rs 14,610 crore, just about Rs 4500 crore is caught in various disputes. And this means that at least Rs 10,000 crore, or 15 per cent of the state's revenue, can be mobilised using just one tool: political will. The Public Expenditure Review Committee had also goaded the Finance Department to initiate an 'arrears recoup' drive. Dr Isaac had already announced that steps would be taken to vacate the stays on tax collection. Nearly Rs 3500 crore of VAT arrears alone are caught in legal disputes.

Besides, there are two other steps that Isaac might vigorously pursue to bail the state out of the current crisis: registration of new dealers and better coordination between the Commercial Sales Tax (CST) department and others. As of now, there are nearly 1.80 lakh registered dealers in the state. However, the data collected by the Department of Economics and Statistics shows that there are 13.24 lakh units in the non-agricultural field existing outside the scope of VAT.

The highest is in the manufacturing sector, nearly 4.9 lakh. Retail traders outside the tax radar total 6.18 lakh. Restaurants and hotels unnoticed by the tax system are 97,826. Even vehicle workshops not paying tax number a whopping 37,510 units.