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  • Oct 19, 2020
  • Transparent taxation: Withdraw untenable tax litigation

    Prime Minister Narendra Modi launched the platform ‘Transparent Taxation—Honouring the Honest’ on August 13, 2020, comprising of faceless assessments, faceless appeals and a taxpayer’s charter. Faceless assessment and appeals aim to eliminate physical interface between taxpayers and tax authorities, thereby hopefully bringing in greater efficiency and transparency to the assessment and appeal process. This is a significant reform in the tax administration process, reducing tax officer’s discretion, tax terrorism, and scope for corruption and litigation.

    It is well known that the Income Tax Department (ITD) is amongst the largest litigants in India. The Receipt Budget 2020-21 indicates that the amount of taxes on income which is under dispute was Rs 8 lakh crore at the end of 2018-19. This is 5.8 times the tax amount not under dispute (Rs 1.38 lakh crore)! About 60% of outstanding disputes have come up in 2017-18 and 2018-19, both in the NDA regime. Of this, the corporation tax amount under dispute at the end of 2018-19 was Rs 4.06 lakh crore—4.9 times the corporation tax amount not under dispute (Rs 0.83 lakh crore). This ratio was lower at 3.7 times at the end of 2013-14.