Tax payers should take advantage of the dispute resolution mechanism and realise part of the Rs 5.5 lakh crore locked up in appeals, Revenue Secretary Hasmukh Adhia said today.
"We have 3 lakh appeals pending and the amount involved is Rs 5.5 lakh crore wherein people's fate are hanging. In order to remove all these disputes, we have come out with a resolution scheme and we do hope in many cases the assessee will prefer to settle the case," he said while addressing the CII National Council meeting.
Finance Minister Arun Jaitley in the Union Budget has proposed a 'dispute resolution mechanism' under which a taxpayer who has an appeal pending before the Commissioner (Appeals) can settle his case by paying the disputed tax and interest up to the date of assessment.
No penalty in respect of I-T cases with disputed tax up to Rs 10 lakh will be levied. Cases with disputed tax exceeding Rs 10 lakh will be subjected to only 25 per cent of the minimum of the imposable penalty for both direct and indirect taxes.
Adhia said the reason for a tax payer to go into appeal is not the assessment amount, but the 300 per cent penalty and he wants to contest the penalty.
"I'm sure this scheme will work. A lot of people will come forward to take benefit of this," he said.
As regards the Budget proposal to lower corporate tax for new manufacturing units to 25 per cent, Adhia said the step would promote Make In India.
"This is our way of inviting foreign investment to our country. If you are foreign company wanting to set up manufacturing unit you are welcome we will charge only 25 per cent. This is the best option available," Adhia added.
Explaining why reduction of corporate tax was not done for
all, Adhia said, "The bill was Rs 50,000 crore for 1 per cent reduction. We had to take a call. The gain from exemption removal only comes from next year not from this year."
Some of the exemptions will be phased out from April 1, 2017 and there also whosoever has already come under the ambit before that date, will continue to enjoy exemption for 10 or 15 years as per the scheme, he said.
"So the final benefit of phase out will come upto 2033. It will not come in single year. So, our calculation is in the year 2017-18 the benefit out of phase out will be about Rs 3,000 crore only in the first year," he said.
"If we do reduction of 1 per cent for everybody, the bill is Rs 50,000 crore. So we have not taken any call on future roadmap. We thought that some of our initiatives like dispute resolution mechanism is successful, we get extra bonanza after which we will be in better situation to declare roadmap for the next three years," he added.
