Relief for small tax payers, government to withdraw 41 per cent cases
The finance ministry has decided to raise the threshold monetary limit for tax department to file appeals in tribunals and courts from Rs 10 lakh to Rs 20 lakh. Union Finance Minister Piyush Goyal said that hike in the threshold would result in withdrawal of 41 per cent of cases from Income Tax tribunals and various courts. These cases involve litigation over recovery of Rs 5,600 crore.
The decision is likely to benefit small tax payers facing litigations in tribunals and courts. The higher limit would mean that 34 per cent of the tax cases filed in Income Tax Appellate Tribunal (ITAT) will be withdrawn. About 48 per cent of the cases in High Courts would be withdrawn. Similarly, 54 per cent of cases in the Supreme Court will be withdrawn.
Piyush Goyal said that the move would lead to an environment of trust between tax departments and tax payers. Goyal said that the move was aimed at creating trust in the tax administration and give relief to honest, small and mid-sized taxpayers.
Besides, the decision is also based on the premise that the cost of litigation is sometimes more than the recovery sought, he said.
Piyush Goyal said that the tax department could file appeals in ITAT/CESTAT only if the tax amount involved is Rs 20 lakh or more, up from Rs 10 lakh at present. Appeals would be filed in High Courts if the tax amount involved in litigation is Rs 50 lakh, up from Rs 20 lakh at present.
For appeals in Supreme Court, the threshold limit has been hiked to Rs 1 crore, from Rs 25 lakh at present. Goyal said only cases where substantial point of law is involved will be appealed against.