According to the Finance Minister, a total of 77,448 cases were pending with Income Tax Appelate Tribunal (ITAT), High Courts and Supreme Courts amounting to a total of ₹1.86 lakh crore as on Mar'15.
Cairn ask government to clarify retrospective tax law
- Cairn Energy CEO, Simon Thomson, had written to PM Modi seeking clarification on India's retrospective taxation policy.
- During his UK visit in 2015, Modi announced that India will not resort to retrospective taxation.
- Cairn was given a tax assessment notice of ₹10,247 crore in Jan'14 on alleged capital gains made by it during internal restructuring in 2006.
- This has adversely affected Cairns' business.
The previous UPA government had amended the Income Tax Act in 2012 to allow tax department to raise tax demands on past deals. This was used to place a ₹20,000 crore tax demand on Vodafone, for its purchase of Hutchison Whampoa Ltd.
Retrospective tax laws hurting India: Jaitley
- Union Finance Minister, Arun Jaitley, said that changes in taxation laws have done more harm than good to India.
- While the tax could not be collected even after the changes, investors, who expect certainty in taxation, got scared of India's fickle tax administration prone to frequent changes.
- He underscored the importance of maintaining fairness in the taxation regime and integrity of officials involved.
Appraisal for tax officials changed
- In order to make tax administration non-adversarial, the Income Tax department has amended the appraisal system of officials, to focus more on quality than collection of taxes.
- The new format will focus on quality of assessment, pace of disposal and widening of tax base.
- This will help reduce frivolous tax demands, harassment by tax department and bring greater accountability in tax assessments.
'Difficulty' in paying taxes
According to the 'Ease of Doing Business' report released by World Bank, India slided to 157 in 2016 from 156 in 2015 under the head 'paying taxes'. The World Bank releases this annual report compiling data for 189 economies.
Easwar panel for friendly tax laws
- A high level panel headed by Justice(retired) RV Easwar has recommended simplifying procedures for Tax Deducted at Source (TDS), calculation of taxable income, income tax refunds within 6 months, etc.
- The panel was set up by the government to decrease litigations, facilitating ease of doing business, and faster resolution of tax disputes.
- Some of these recommendations may find place in the Union Budget 2016-17.
Speeding up smaller dispute settlement
So as to accelerate the disposal of smaller tax disputes, the government raised the monetary limit for filing appeals in appellate tribunals from ₹4 lakh to ₹10 lakh and to ₹20 lakh for high courts.
Govt to reduce tax disputes by 50%
- In a bid to make taxation policies people friendly, the government is working on reducing the number of pending tax disputes by half.
- Presently, the Income Tax Commissioners (appeals) focus mainly on the large cases, delaying smaller cases.
- The shift in focus to smaller cases by grouping them together, will help reduce pending cases.
- Similar strategies may be adopted for tribunals and higher courts.