Trillion rupees caught in pending revenue tax litigation, new motion wanted: report
Mumbai: While the recently introduced system has helped reduce dependence on tax disputes, the government may need to take further steps to alleviate the problem of the increasing number of tax disputes in the country, a research report said.
Governments recently announced that while programs like Vivad se Vishwas are helping, more needs to be done, according to a Deloitte research report. According to the report, there is a large number of funds in litigation that could get into the system if resolved quickly. The report also argues that the tax department is losing the majority of cases at different levels and that certain systems offered at different levels could actually result in a higher collection than the “paper tax collection” which is seldom implemented.
Based on data, the business survey estimated the average dependency on tax cases in high courts to be nearly six years. In their case study of central government taxes, the survey found there were around 137,000 direct tax cases pending as of March 2017. These cases concerned either the Income Tax Appellate Tribunal-ITAT (92,338 cases), High Courts (38,481 cases) and the Supreme Court (6,357 cases). Income tax claims included in this litigation were approximately INR 4.96 billion (INR 49,600 trillion), according to the report.
“Given that the majority of tax disputes are conducted by tax authorities, it must be recognized that the income tax department challenged in these cases has a very low success rate. It is clear that such a system can only be successful if the taxpayer (who would make a decision in his favor at the lower level) is offered a substantial reduction in the original tax claim itself, without any interest or penalty charges . The government must forego a reasonable percentage of its “paper” requirements in the system in order for taxpayers to find it reasonable to opt for the system in order to gain tax security and reduce their litigation costs in both money and time ”, so Deloitte report said.
“The tax authorities are keen to develop a system that will allow them to attract some of the best lawyers to represent them, especially in some of the most well-known cases.”
According to government officials, one of the reasons tax disputes don’t go their way is because the tax department is unable to attract the best lawyers. The tax authority is keen to develop a system that will enable them to attract some of the best lawyers to represent them, especially in some of the most well-known cases. The Deloitte report, on the other hand, suggested that delays and dependencies were due to the increase in the overall judicial workload, which in turn was due to the expansion of jurisdiction and the use of orders and stays. In the case of tax disputes, this is because the government continues to litigate at every stage of the appeal process despite high default rates.
The research report suggested that India could consider other countries to help reduce tax disputes. In Australia, Canada, the United States and the United Kingdom, only the taxpayer can appeal the order to the tax court once the tax administration decides on the taxpayer’s tax liability (whether through mediation or an appeal) to the tax administration.
“In India, a wing (assessment wing) of the tax administration is authorized to appeal against the order of the appellate wing to the tax court (ITAT) [CIT(A)] the same tax administration.
“In India, a wing (assessment wing) of the tax administration is authorized to appeal against the order of the appellate wing to the tax court (ITAT) [CIT(A)] the same tax administration. “
Only if the Income Tax Act is changed so that only a taxpayer can appeal against the appeals authority of the tax administration [the CIT(A)]the first step towards a permanent solution can be taken. The tax administration wing would of course retain the power to re-evaluate a taxpayer’s income in certain cases (e.g. post-fraud detection).
The number of complaints submitted to ITAT will be significantly reduced. This legal measure must also go hand in hand with structural changes within the tax administration, ”says the report.