Report of the Comptroller and Auditor General of India for the year ended March 2024 Performance Audit Report on Exemptions and Deductions to Banks and Non-Banking Financial Companies Union Government Department of Revenue – Direct Taxes Report No. 40 of 2025 (Performance Audit - Civil)
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What did the audit examine?
This audit examined the exemptions and deductions claimed by banks and non-banking financial companies (NBFCs) in income tax assessments conducted by the Income Tax Department, Department of Revenue, for financial years 2017-18 to 2021-22.
Who / what it concerns
Union Government Department of Revenue – Direct Taxes
What the auditor found
- Excessive deductions for bad debts: ₹33,459.08 crore
- Excessive deductions for provisions for bad and doubtful debts: ₹2,971.26 crore
- Excessive deductions for special reserves: ₹531.18 crore
- 127 cases where bad debts totaling ₹40,178.47 crore were written off without borrower PAN
- 58 cases where bad debts of ₹1,69,782.47 crore were allowed as deductions without borrower information
- 52 instances where banks offered only ₹2,098.35 crore in tax for recoveries of ₹14,303.00 crore reported to RBI
- 15 instances where HFCs reported recoveries of ₹137.89 crore not reflected in tax filings
Points worth noting
- Total probable tax implications: ₹74,766.39 crore
- Banks and NBFCs allowed deductions without proper documentation (PAN, borrower details) for bad debts totaling ₹2,10,000+ crore
- Recovery amounts reported to RBI/NHB not fully reflected in tax filings: ₹14,303.00 crore vs ₹2,098.35 crore for banks, ₹137.89 crore for HFCs
| Source body | Comptroller & Auditor General of India (CAG) — audit reports |
| Reference number | Report No. 40 of 2025 |
| Status | closed (section: audit_report) |
| Year | 2025 |
| Closing date | — |
| Documents | 1 |
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