Amount locked up in a tax dispute to reduce Rs 5,600 cr: Piyush Goyal

The amount locked out in tax litigation will decrease by 5,600 crores as the government has decided to raise the monetary limit to appeal to the courts and tribunals, the Minister of Finance said today. Piyush Goyal.

In March 2017, tax litigation worth Rs 7.6 lakh crore were stalled in court proceedings, in high court and the Supreme Court.

In order to reduce the number of disputes, the government yesterday raised the threshold for filing appeals in the courts at Rs 20 lakh, while the higher courts and the Supreme Court increased respectively to 50 lakh and Rs 1 crore.

Earlier, the threshold for filing appeals by the INITAT / CESTAT tax department was Rs 10 lakh, while the same in the high courts and the Supreme Court was Rs 20 lakh and Rs 25 lakh, respectively.

With this, tax disputes at the Central Direct Tax Council (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC) will be reduced by 41 percent and 18 percent, respectively.

A total of 29,580 cases would be withdrawn from various litigation forums, reducing the number of disputed cases by 37%.

"In the case of CBDT, the withdrawal of 41% of cases will have an impact in terms of revenues of Rs 4,800 crores in absolute terms, while in the case of CBIC, the withdrawal of 18% of cases will have an impact on the income of Rs 800 crore, "Goyal told reporters.

He said that going to the limit of the rising threshold is a step towards the ease of doing business.

"Small and medium-sized taxpayers will benefit from increasing the call limit, since they can now focus on their business rather than pleading in various jurisdictions." The government trusts honest taxpayers, "said Goyal.

Following the decision of yesterday, the CDBD will withdraw 34% of the cases filed in court, 48% of the cases in the high courts and 54% in the Supreme Court.

The CBIC will withdraw 18% of the cases in court, 22% at the highest levels and 21% at the Supreme Court.

However, this will not apply in cases where the substantial point of law is at stake, the ministry said yesterday.

The 2017-2018 Economic Survey indicated that tax litigation was a result of the government's persistence in its procedures despite high failure rates at each stage of the appeal process.

India's tax services have opposed several tax disputes, but with a low success rate of less than 30 percent, Survey said.