Economic Survey: Low success rate in resolving direct tax disputes

Tax departments have had a success rate below 30 per cent in dispute resolution, Economic Survey 2017-18 pointed out.

A whopping 66 per cent of pending cases accounted for only 1.8 per cent of the value at stake and a minuscule 0.2 per cent of cases accounted for 56 per cent of value at stake, showing an adversarial tax regime in the country. The government had in 2016-17 modified the annual appraisal proforma of income tax officials, giving weight to their assessments orders being upheld on appeal.

The Survey said collections of direct taxes by states and local governments were significantly lower than those of their counterparts in other federal countries such as Brazil or Germany.

Meanwhile, there has been an addition of about 1.8 million individual income tax filers since demonetisation in November 2016, according to the Survey. Measures such as GST and demonetisation have led to an increase in personal income tax collections, substantially from about 2 per cent of gross domestic product (GDP) between 2013-14 and 2015-16. It was likely to rise to 2.3 per cent of GDP in 2017-18, a historic high, the Survey added.