Audit Reports

Direct Tax

Overview

This Report primarily discuss compliance to the provisions of the Income Tax Act, 1961 and the associated rules, procedures, etc. as applied to all aspects related to the administration of direct taxes.  Direct taxes receipts of Union Government in FY 2018-19 amounting to Rs 11,37,718 crore.  Share of direct taxes in gross tax revenue increased to 54.7 per cent in FY 2018-19 from 52.2 per cent in FY 2017-18.  Voluntary compliance by assessees accounted for 82.6 per cent of the total collections of Corporation and Income Tax in FY 2018-19.  This Report includes 393 high value cases having tax effect of Rs 8,380.79 crore.  More than 82 per cent individual taxpayers faced the TDS mismatch problem due to the difference in the amount available in Form 26AS and that claimed by the assessees through their ITR, majority being salaried taxpayers.  The interest was wrongly computed either due to systemic deficiencies in Assessment Information System (AST) or due to incorrect interventions/ computation by the assessing officers (AOs).  Availability of facility for manual intervention in AST was misused by AOs by way of modifying the interest at excess amount which led to blockade of refund to the assessee.  The ITRs of the assessees who traded in the shares of penny stock companies were neither selected for scrutiny nor reopened for scrutiny despite the ITD having information of claiming LTCG.  The ITD failed to issue notices for filing ITRs, to the assessees who were involved in trading penny stocks, but have not filed their ITRs.  The AOs had no uniformity in making additions of exempt LTCG, despite the fact that the grounds of additions were same.

Download Audit Report

• Index
• Preface
• Highlights
• Chapter 1 Direct Taxes Administration
• Chapter 2 Audit Mandate, Products and Impact
• Chapter 3 Corporation Tax
• Chapter 4 Income Tax
• Chapter 5 Interest under sections 234A, 234B, 234C and 244A of the Act
• Chapter 6 Long term capital gain on Penny Stocks
• Appendices
• Abbreviations