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Rs 4,500 cr 'irregular' tax benefits given to infra firms: CAG

  • Rs 4,500 cr 'irregular' tax benefits given to infra firms: CAG

India's official auditor said on Tuesday that the Income Tax department has given irregular tax benefits to infrastructure companies without verification, leading to a revenue loss of over Rs 4,500 crore.

The Comptroller and Auditor General (CAG) in a report tabled in Parliament said the Central Board of Direct Taxes (CBDT) did not have any established mechanism to assess the impact of revenue foregone on account of deductions under Section 80 IA on the economy and industrial growth of the country.

"There is no existing system to ascertain from the sponsoring ministries as to whether the tax holidays have had the desired impact on the growth of the economy," the CAG said in its performance audit of the CBDT.

In the absence of such a mechanism, the CBDT had failed to ascertain whether the very purpose of tax holidays has been achieved, it added. 

The Income Tax department has "irregularly" allowed deductions to various companies engaged in infrastructure business which have tax effect of Rs 4,524 crore, the report said.

This included Rs 1,766.74 crore of tax benefit availed by Reliance Ports & Terminals for building captive jetties at Port Sikka in Bihar. 

Other companies that availed of such benefits include JSW Energy (Rs 340 crore), Reliance Infrastructure (Rs 51.88 crore), Tata Power (Rs 36.99 crore) and Gujarat Fluro Chemicals (Rs 22.75 crore).

The auditor recommended that CBDT may evolve a mechanism for proper linkage between tax benefits allowed by the department with the actual investment made by the assessee in order to assess the impact of a tax holiday.


: November 22, 2016 8:11 pm
Read 863 times

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