Clarity on tax litigation, Income Tax department to write to over 2.59 lakh taxpayers

The income tax department of India has done a massive awareness campaign for the one­time black money compliance window, the tax authority will now write to over 2.59 lakh taxpayers to avail benefits of a similar scheme.

Finance Minister Arun Jaitley while announcing this scheme during his budget speech this year had said the amount in dispute in these cases was Rs 5.5 lakh crore. Apart from writing individual letters to such taxpayers, a directive issued by Central Board of Direct Taxes (CBDT) said the department will also hold sessions with Chartered Accountants and Bar associations in various regions across the country to make the scheme "a resounding success."

The 'Direct Tax Dispute Resolution Scheme, 2016' got operational from June 1 and seeks to address the issue of pending litigation before the first appellate mechanism in the Income Tax department ­­ the Commissioner of I­T (Appeal).

As per the data updated in this regard, there are 73,402 appeals with tax effect above Rs 10 lakh and 1,85,858 appeals with tax effect below Rs 10 lakh pending before CIT (Appeals) across the country. "A total of 2,59,260 appellants are eligible for availing this scheme. The taxman will write to each of these assesses to resolve their pending litigation within a time bound period of 120 days," a senior official said.

As per the scheme, a taxpayer who has an appeal pending before the CIT (Appeals) can settle his case by paying the disputed tax and interest up to the date of assessment. No penalty in respect of cases with disputed tax up to Rs 10 lakh will be levied. Cases with disputed tax exceeding Rs 10 lakh, penalty of 75 per cent would stand waived on payment of tax and interest and 25 per cent of penalty levied/leviable and any pending appeal against a penalty order can also be settled by paying 25 per cent of the minimum of the imposable penalty. Also, the assessee who opts for the said scheme will enjoy immunity from prosecution on the disputed tax. CBDT has asked all supervisory heads of the I­T department to ensure assistance to willing taxpayers in this regard.

While presenting the budget, Jaitley had said "litigation is a scourge for tax­friendly regime and creates an environment of distrust. "Litigation also leads to increasing the compliance cost of tax payers and administrative cost for the government," he had said. To reduce the huge number of cases, the Dispute Resolution Scheme (DRS) was launched. This scheme offers an opportunity to the taxpayers to resolve pending litigation and bring clarity and certainty in their tax matters.

The department (I­T) stands to benefit with reduced administrative cost involved in handling appeals as well as timely collection of tax, interest and penalty due," CBDT said. The government is running another such programme called the Income Declaration Scheme (IDS) to flush out domestic black money. IDS also got operational on June 1 and will end on September 30.