NEW DELHI: The government on Thursday said that an increase the threshold for filing appeal in
tax cases may result in around 27,000 cases being withdrawn and described it as a move to provide relief to smaller taxpayers and a message that it trusts them.
“A combined direct and indirect tax amount of Rs 7.6 lakh crore is under dispute at various levels from tax tribunals to the
Supreme Court, according to the latest figures with us. While this means very large number of cases, the value of 66% of those cases is only 1.8% of the disputed tax amount. Sometimes the amount spent on litigation is more than the amount recovered as tax later. We want to provide relief to small tax payers and give a message that the government trusts them,” said Piyush Goyal, who is officiating as finance minister. He added that the last
Economic Survey had also made a case for this.
On Wednesday, the government increased the threshold for filing cases by at least twice. The minimum tax dispute amount for moving tax tribunals, high courts and SC has been hiked from Rs 10 lakh, 20 lakh and Rs 25 lakh to Rs 20 lakh, Rs 50 lakh and Rs 1 crore, respectively. However, cases involving “substantial points of law” will not be withdrawn even if the amount of tax dispute is less than the new threshold.
“Once we withdraw cases of small amounts under the new threshold, we estimate 41% of cases — 26,812 cases in all — to be taken out of litigation at various levels. In absolute terms, the tax implication of withdrawing such cases — where no substantial point of law is involved — is about Rs 5,600 crore out of the total tax dispute amount of Rs 7.6 lakh crore,” Goyal said.
The minister said that the tax implication for withdrawing cases of small direct tax amount will be about Rs 4,800 crore but they could lead to a decline in litigation of cases of this nature would overall be 41% and the break-up is: by 34%, 48% and 54% in tax tribunals, high courts and Supreme Court, respectively. Similarly, the amount involved for indirect taxes is about Rs 800 crore but withdrawal of cases would be 18% overall and the breakup is: by 16%, 22% and 21% in tax tribunals, high courts and Supreme Court, respectively.
“This move will significantly lead to improvement in ease of doing business, unclog the legal system of small cases and show that the government trusts tax payers,” Goyal said.
Meanwhile speaking on another issue, the acting FM said for the first time 99% of refunds amounting to Rs 70,000 crore have been given to tax payers in the first quarter of this year. “This has happened for the first time. We do not want backlog of returns,” the acting FM said.
