Audit Reports

Direct Tax

Overview

A taxpayer becomes eligible for a refund if the tax paid by him was higher than the tax due in the year. The refund process gets initiated with the claim contained in the annual tax returns submitted by the taxpayer, which is then examined by the assessing officer for eligibility. The claim is finally disposed when the refund voucher is prepared and issued to the assessee through the authorized banks.

Timely disposal of refund claims is a key measure of the operational efficiency of tax administration. Prompt refunds instill confidence among taxpayers and increase tax compliance. Automation was aimed to speed up the disposal and thus reduce the pendency of claims.

We conducted performance review of income tax refunds processed during 2005-06 to 2008-09 in order to seek an assurance that the systems and procedures were geared towards timely and accurate processing of refund claims and that internal controls provide for effective monitoring. While the department largely cooperated with our efforts, access to records was a major constraint with the department not producing 20 per cent of the records asked for by us.

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• Preface
• Executive Summary
• Summary of Recommendations
• Chapter 1 - Introduction
• Chapter 2 - Incidence of Refunds
• Chapter 3 - Refunds Process and Internal Controls
• Chapter 4 - Timeliness in processing of Refunds
• Chapter 5 - Accuracy of Advice
• Appendices
• Glossary