The government will mop up Rs 1,400 crore this fiscal by taxing the second instalment of arrears due to central government employees, who were awarded increased salary by the sixth pay commission.
The first instalment of arrears (representing 40 per cent of the increased pay) was disbursed during financial year 2008-09.
The employees will also have to pay two per cent education cess on the total amount of the arrears.
"The total arrears for this fiscal is Rs 18,000 crore. The arrears that would fall in the tax net would be about Rs 9,000 crore. Barring the grade-IV employees, and according to calculations, around 15 per cent of this amount-- about Rs 1,400 crore (plus education cess) would go into government's coffers during this fiscal as tax," a senior Finance Ministry official said.
"The Central and State government and various organisations under them are advised to compute the correct tax liability of every employee on second instalment of arrears drawn by him and immediately recover the full tax liability along with education cess thereon at the rates in force," a recent CBDT circular asked all government employers.
Distribution of the remaining 60 per cent of arrears has already begun.
The I-T department has received the TDS on arrears from various government departments, while the rest would be received soon, the official said.
Source : Economic Times.
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