The governments net direct tax collections zoomed 644 per cent to Rs 14,812 crore in April, against Rs 1,992 crore in the year-ago period, as refunds fell from Rs 25,099 crore in April 2011 to Rs 9,819 crore in April this year.

A major portion of the receipts was accounted for by personal income tax. Collections from companies stood at Rs 383 crore in April, compared with a fall of Rs 6,490 crore in April 2011, owing to a higher refund outgo. Personal income tax collections rose 71 per cent to Rs 14,423 crore, against Rs 8,472 crore in the year-ago period.

All assessing officers are not yet attuned to the new system. They have to do one more process for better audit trail.The refunds would pick up in the coming months, said a finance ministry official, denying that the Income Tax Department had slowed the process of refunds.

Huge refunds in April 2011 had pulled down the governments net tax receipts, forcing it to go for short-term borrowings to meet immediate cash needs. The matter erupted into a controversy when then revenue secretary, Sunil Mitra, suggested refunds should be moderated.

While the finance ministry pays six per cent interest a year on late payment for refunds, it had to borrow from the market at coupon rates of 7.03-8.30 per cent.

Refunds of Rs 98,000 crore in 2011-12 had pulled down direct tax collections during the year to Rs 4,94,000 crore, against the Budget Estimate of Rs 5,32,000 crore. Refunds of Rs 74,000 crore and Rs 58,000 crore were recorded in 2010-11 and 2009-10, respectively.

Tax refunds may rise further in 2012-13, since the surge in online returns has hastened the processing of claims. The ministry expects refunds of Rs 1,10,000 crore to Rs 1,20,000 crore. The direct tax collection target for 2012-13 is Rs 5,70,000 crore.