According to minister of state for finance R Janarthanan, the decision was taken by the government to help companies mobilise money to pay tax arrears due to industrial recession.

The four-month Samadhan scheme had so far garnered only Rs 650 crore tax revenue as it started picking up very late, that too in the last 20 days. Major industries in textiles, steel and auto were hit by recession and they were unable to meet the liability under the scheme, he said.

Meanwhile, revenue field officers had also recommended that the deadline be extended beyond December 31 as collections have started picking up only in the last few days.

Janarthanan also indicated that Samadhan type of scheme would become an annual feature without which it was difficult to mop up taxarrears running into Rs 52,000 crore.

There were as many as 2,000 cases where tax arrears were more than Rs 1 crore each. Unless the scheme, which is an effective tool in arresting the growth of parallel economy, was held over a period of four-five years, it would not be possible to garner the huge tax dues.

"It (Samadhan) will be an annual feature,'' Janarthanan said, adding that the government could not fix targets this year for mopping up tax under the scheme, but next year onwards "we will have targets for Samadhan."

Originally, the revenue department had expected to mop up Rs 1,500 crore tax arrears. Till December 28, as many as 22,000 applications, involving Rs 1,900 crore, had been received that would lead to collection of tax arrears of Rs 650 crore.

The scheme had provided for two months' time for payment of tax dues and with the extension of the scheme by a month, tax dues can now be paid till March 31.

In Calcutta, Central Board of Excise and Customs chairman SD Mohile also said thescheme had been extended till January 31 and that the scheme was expected to generate Rs 1,000-crore tax revenue.

Just before the cabinet decision on Tuesday night, a finance ministry release had categorically said there would be no extension of the scheme beyond December 31 and that an action plan had been put in place with legal backing to come down heavily against tax defaulters not availing of the scheme.

Janarthanan also said the tax department would issue permanent account numbers (PAN) to all applicants by March 31 in Delhi, Mumbai and Chennai. In case of Calcutta, it might take some more time, he said.

As against 1.38 crore income tax payers, there were 1.5 lakh PAN applicants, indicating that the scheme had helped in widening the tax net, he said.