Skip to main content

Tax dispute resolution window has few takers

Barely four per cent of direct tax litigation cases pending with the income tax department came under the Dispute Resolution Scheme (DRS) of 2016, with total taxes to the tune of Rs1,250 crore.
Extension of the scheme by a month till January 31 failed to elicit much response, resulting in 10,500 applications under the scheme making up for only two per cent of the disputed amount at the level of the Commissioner of Income Tax (Appeals).
Among the total applications, the government has received Rs250 crore so far from the orders passed in 4,100 cases. The applicants will get about two months to pay the tax amount, interest and penalty from the date of orders. 

The response suggests only small-value cases came under the scheme, with an average tax incidence of Rs11 lakh.

“The scheme got a very poor response compared to what was expected. The scope of the scheme was very limited. Those hopeful of getting a favourable verdict at the appeals commissioner-level did not apply. But the response is less than a fifth of what was expected," said a government official.

The one-time settlement scheme, announced in the Budget for 2016-17 by Finance Minister Arun Jaitley, commenced on June 1, 2016, and was originally till December 31, 2016, but was extended by a month later. 

Close to 250,000 cases are pending at the appeals commissioner stage, with Rs5 lakh crore locked in.

The government is targeting a 14.3 per cent growth in direct taxes at Rs8.47 lakh crore for the current financial year. Till February, the government collected about Rs6.7 lakh crore, a growth of 10.7 per cent.

The Direct Tax DRS, 2016, allowed taxpayers whose appeal was pending as of February 29, 2016, to settle cases by paying the disputed tax and interest up to the date of assessment. For a disputed 

tax amount of up to Rs10 lakh, the penalty would be forgone. In cases where the disputed amount was above Rs10 lakh, a minimum penalty of 25 per cent would be levied. For penalty appeals, the scheme allowed the assessee to pay a minimum penalty of 25 per cent.

The scheme also sought to settle the retrospective tax disputes by waiving interest and penalty if the companies agreed to pay the principal amount of the tax demand. However, neither Vodafone, nor Cairn came forward.

Meanwhile, the Income Tax Appellate Tribunal in a judgment last week upheld the tax department’s capital gains demand of Rs10,247 crore from UK energy giant Cairn in an acquisition deal in 2006. 

But, the tribunal gave relief on the Rs18,800-crore interest for non-payment of advance tax on the ground that since it was a retrospective levy, it could not have been anticipated by the assesse. 

The department will shortly carry out penalty proceedings against the company, which could range from 100 to 300 per cent.

UK-based telecom company Vodafone is also locked in a battle with the tax department in international arbitration since 2007 for the $11-billion acquisition of Hutchison Essar. The tax demand, which was initially around Rs8,000 crore, has now more than doubled.
Business Standard New Delhi,20th March 2017

Comments

Popular posts from this blog

Govt’s gamble on GST cuts: What do the bond and currency markets signal?

  It’s not just humans who suffer from cognitive biases; markets do too. Interestingly, different financial markets exhibit distinct biases, each interpreting events through its own prism of prejudice. Take the recent announcements on GST reforms: equity markets have chosen to view them through the lens of growth, while bond and currency markets are focusing on potential macroeconomic risks—fiscal pressures and current account challenges. So, which lens captures the true pulse?Equity markets may be right in expecting GST reforms to revive consumption, which has remained lacklustre for a while. But the key question remains—will this revival come at the cost of broader macro stability?It is well known that consumption stocks have rallied since the GST rationalisation announcement. But what about bond markets? What signals are they sending since this rejig was announced from the ramparts of the Red Fort?The signs aren't encouraging. Bond prices have slumped and yields have surged sinc...

Luxury carmakers urge clarity on GST rates to boost festive season sales

  A clear picture regarding new GST rates at the earliest will help the overall auto industry, including the luxury car segment, to regain momentum in the ongoing quarter, which generally sees enhanced sales on account of the festive season.The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation.In an interaction with PTI, BMW Group India President and CEO Hardeep Singh Brar said the recent speculation about the change in GST rates has caused uncertainty in the minds of consumers.Consumer interest and demand is strong, but they (prospective buyers) have adopted a wait-and-watch approach, and this delayed decision-making is impacting new vehicle sales at a certain level, he noted."Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust," Brar stated.He also hoped that the sustainable p...

Sebi proposes tighter norms for green bond third-party reviewers

  Sebi on Friday said it has proposed to tighten the norms to appoint independent third-party reviewers or certifiers for green debt securities to align them with requirements for other ESG-linked bonds.In a draft circular, Sebi said that the current norms for green bonds, introduced in February 2023, lack detailed requirements around reviewer independence, conflict of interest mitigation, and disclosure standards that are now in place for other ESG-linked securities under a June 2025 circular.The regulator's latest proposal seeks public comments on a revised framework that would bring parity by incorporating comprehensive criteria for third-party certifiers of green bonds on non-convertible securities.Under the proposed norms, issuers of green debt securities will need to appoint reviewers who are independent of their management, directors, and key managerial personnel. These reviewers will be remunerated in a way that prevents any conflicts of interest and possess relevant expert...