The finance ministry may delay income-tax refunds to cushion strained resources as it fears a drop in revenue collection because of rising inflation and moderation in growth.

"I would like to sound a note of caution in respect of targets for direct taxes that have been set for this year at Rs 5.32 lakh crore," Revenue Secretary Sunil Mitra said at the annual conference of chief commissioners and director generals of income tax on Tuesday.

"In this context, the board's (CBDT) proposal to clear all refunds of assessment year 2010-11 and 2011-12 will require to be moderated in keeping with the actual performance in direct tax collections." The CBDT had promised to make the refund process faster and efficient.

In 2010-11, the board issued 8.5 million refunds totalling Rs 74,000 crore. In April this year, it issued another 2 million refunds worth about Rs 23,000 crore. The board's charter says it should aspire to refund excess tax, along with interest, within six months in case of e-filing of returns and nine months when filed manually.

But law permits the government to delay refunds till next fiscal. The statutory time limit to process returns and issue refunds for the current fiscal is March 31, 2013. Mitra also cautioned against a reduction in import duty on crude as a measure to reduce the impact of inflation.

"Any rollback of customs duty on crude oil or of excise duty on petroleum products on account of rising crude prices, or on account of deregulation of diesel prices, will significantly impact our indirect tax collection."