Tax department to appeal in fewer disputes to give relief to tax payers, cut litigation

  • The tax department will not appeal to the tax tribunal (ITAT) unless the ‘tax effect’ or the disputed tax claim is over 50 lakh in a case
  • The move is expected to improve ease of doing business for companies struggling to cope with a cooling down economy.

New Delhi: The Central Board of Direct Taxes (CBDT) on Thursday sharply raised the threshold for filing appeals in tax disputes to reduce tax litigation and to give relief to tax payers. The move is expected to improve ease of doing business for companies struggling to cope with a cooling down economy.

The CBDT said in a circular on Thursday that it has raised the monetary threshold for filing appeals at all levels—from tribunals, through High Courts to the Supreme Court. As per this, the tax authority will not appeal to the Income Tax Appellate Tribunal (ITAT) unless the ‘tax effect’ or the disputed tax claim is more than 50 lakh in a case. This threshold was earlier 20 lakh.

When it comes to appealing against the decisions of the ITAT, the department will not approach a High Court unless the tax effect is more than RS 1 crore, up from 50 lakh earlier. It has also doubled the monetary limit for appealing against the decisions of the High Courts in the Supreme Court to 2 crores, said the CBDT circular.

The monetary limits were last raised in 2018. The move is likely to limit the number of appeals getting filed. The apex direct tax policy making body said the relaxation in norms that is effective from Thursday, was made as per representations from stake holders.

The move also coincides with criticism of the Income Tax department by industry executives following the recent death of Café Coffee Day founder V.G. Siddhartha. A letter, attributed to Sidhartha, has said he was under pressure from one of the private equity investors and had faced harassment from a tax official, a charge that the tax department rejects. Mint reported on 30 July quoting an unnamed income tax official that there was no harassment and the department had followed due process under law in the case.

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