Amount locked up in tax litigation to reduce by Rs 56 bn as govt cuts limit

The amount locked up in tax litigation will come down by Rs 56 billion as the government has decided to hike the threshold monetary limit to file appeals in tribunals and courts, Finance Minister Piyush Goyal said on Thursday.

As of March, 2017, tax disputes worth Rs 7.6 trillion were stuck in various stages of litigation in tribunals, High Courts and the Supreme Court, he said.

In order to reduce litigation, the government yesterday hiked the threshold limit for filing appeals in tribunals to Rs 2 million, while the same for High Courts and the Supreme Court has been raised to Rs 5 million and Rs 10 million, respectively.

Earlier, the threshold for filing appeals by the Tax department in ITAT/CESTAT was Rs 1 million, while the same in High Courts and the Supreme Court was Rs 2 million and Rs 2.5 million, respectively.

With this, tax litigation in the Central Board of Direct Taxes (CBDT) and Central Board of Indirect Taxes and Customs (CBIC) will get reduced by 41 per cent and 18 per cent, respectively.
 

In all, 29,580 cases would be withdrawn from various litigation fora, reducing tax disputed cases by 37 per cent.

In case of CBDT, the withdrawal of 41 per cent of the cases, will have a revenue impact of Rs 48 billion in absolute terms, while in case of CBIC, withdrawal of 18 per cent of cases will have a revenue impact of Rs 8 billion, Goyal told reporters here.

He said the move to hike threshold limit is a step towards ease of doing business.

Small and mid-sized taxpayers will benefit with the increase in threshold limit for filing appeals as they can now focus on doing business rather than litigating in various fora. The government trusts the honest tax payers, Goyal said.

Following yesterday's decision, CBDT will withdraw 34 per cent of cases stuck in tribunal, 48 per cent of those stuck in High Courts and 54 per cent in the Supreme Court.

CBIC will withdraw 18 per cent cases from tribunal, 22 per cent from High courts and 21 per cent from the Supreme Court.

However, this will not apply in such cases where the substantial point of law is involved, the ministry had said yesterday.

The Economic Survey 2017-18 had said that the tax litigation cases stems from government persisting with litigation despite high rates of failure at every stage of the appellate process.

The tax departments in India have gone in for contesting against in several tax disputes but with a low success rate which is below 30 per cent, Survey had noted.