A comprehensive audit by the Comptroller and Auditor General of India exposes significant procedural delays and miscalculations in the government’s Direct Tax Vivad se Vishwas scheme, risking undermining national revenue goals amid ongoing tax administration weaknesses.
The Comptroller and Auditor General of India has flagged widespread delays, calculation mistakes and rejected claims in the government’s Direct Tax Vivad se Vishwas scheme, a dispute-settlement programme meant to clear long-running income tax litigation and speed up revenue collection.
According to a report tabled in Parliament on Thursday, the audit found that forms were often issued well beyond the prescribed timelines, with Form-3 delayed in 63% of sampled cases and some cases taking as long as 868 days. Form-5, which closes the settlement, was also issued late in 45% of cases reviewed, with delays extending to 954 days. The CAG said consequential effect orders, which implement the outcome of appeals and settlements, were missing in thousands of cases or issued after delays of up to 1,398 days.
The audit covered 5,212 cases across 174 designated authorities and found that some valid declarations were wrongly rejected despite taxpayers being eligible for the scheme. It also identified 208 cases involving a tax effect of ₹423.47 crore where the amount payable was computed incorrectly. In another 55 cases, interest paid to assessees under Section 244A of the Income Tax Act was not withdrawn during processing, leading to a loss to the exchequer.
The report placed the scheme in the context of a large backlog: as of January 31, 2020, disputed direct tax arrears of ₹10.09 lakh crore were tied up in 4.15 lakh appeal cases. Applications were received for 1.32 lakh cases worth ₹0.99 lakh crore, and by July 22, 2022, 1.06 lakh cases had been settled with ₹71,924 crore collected. The CAG has urged the Central Board of Direct Taxes to set firm timelines, strengthen IT controls, publish standard operating procedures and improve internal checks before refunds are issued. Earlier CAG reports have also pointed to tax-assessment errors and delays in giving effect to appeal orders, suggesting the latest findings fit a broader pattern of procedural weakness in India’s direct tax administration.
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