As of January 20, the department has already disposed of 1.65 lakh CIT(A) cases, the official added. In FY25, nearly 5.4 lakh appeal cases were pending, involving a disputed tax demand of about ₹16.75 trillion.
On penalties, the official explained that assessment and penalty proceedings will now be combined into a single order, eliminating separate litigations that earlier accounted for 1-1.5 lakh cases out of 5.4 lakh cases. If taxpayers accept under-reporting, pay tax plus interest, and forego appeal, 50 per cent penalty is waived. For misreporting cases, the penalty has been reduced from 200 per cent to 100 per cent, positioned more as additional tax. “If you agree and pay, the matter closes without branding the taxpayer as penalised,” the official said, adding that appeals and prosecution remain options only if contested.
Another major compliance booster is the updated return facility, which the official described as “very successful”. Around 1.22 crore updated returns have been filed since its expansion, allowing taxpayers to voluntarily correct discrepancies up to four years with graded fees, he said.
The recent expansion of safe-harbour rules for the information technology (IT) and IT-enabled services (ITeS) sector will provide tax certainty to virtually all players, with only around 90 companies falling outside the regime due to higher turnover above ₹2,000 crore, the official disclosed.
He revealed that the unified safe-harbour margin of 15.5 per cent — applicable across IT services, IT-enabled services, software development, and knowledge process outsourcing (KPO) — was arrived at after analysing records of nearly 6,000 companies. These overlapping sectors have now been brought under a single umbrella to eliminate impractical distinctions.
Of the approximately 44,000 companies engaged in cross-border related-party transactions, about 30 per cent belong to the IT/ITeS space. With the eligibility threshold raised to ₹2,000 crore, the vast majority now qualify for safe-harbour benefits. “Only around 90 companies fall outside. Of these, 60 already have advance pricing agreements (APAs). The remaining 30 can opt for APAs, which we aim to complete within two years,” the official said.
Crucially, safe-harbour approvals will be entirely system-driven, based on fixed parameters, removing any scope for discretion. “This is not tax relief. It is certainty of taxation. And certainty drives investment,” the official emphasised, underscoring the move as a boost for India’s position as a global tech services hub.
"The reforms address longstanding industry demands for predictability in transfer pricing, reducing litigation risks and encouraging foreign investment in the sector," he said.
Certain amendments perceived as retrospective are clarifications to address technical interpretations and protect revenue interests, without introducing new positions, the official clarified. These involve two key fixes applied from past dates: one, clearing up the 60-day deadline for transfer pricing officers to finish their work, and the other ensuring tax orders are not invalidated over minor errors in mentioning the computer-generated Document Identification Number (DIN), as long as the number is referred to in some way.
On attracting data centre investments, the official reiterated that foreign cloud providers face no risk of global income taxation in India merely for locating facilities here, with domestic revenue appropriately taxed through local entities.
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Assessment and penalty proceedings will now be combined into a single order
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If taxpayers accept under-reporting, pay tax plus interest, 50% penalty is waived
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For misreporting, fine reduced from 200% to 100%
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Updated return facility another major compliance booster
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