The Narendra Modi government will not be able to recover about Rs 6,000 crore in tax after it decided to withdraw over one-third of tax dispute cases pending in litigation.
Tax disputes worth Rs 7.6 lakh crore were stuck in various stages of litigation in tribunals, high courts and the Supreme Court at end of March 2017, interim Finance Minister Piyush Goyal told reporters in New Delhi today.
“In case of CBDT (Central Board of Direct Taxes), the withdrawal of 41 percent of the cases, will have a revenue impact in absolute terms of Rs 4,800 crore, while in case of CBIC (Central Board of Indirect Taxes and Customs) withdrawal of 18 percent of cases will have a revenue impact of Rs 800 crore.Piyush Goyal, Interim Finance Minister
The Finance Ministry, in a statement issued yesterday, had announced plans to increase threshold monetary limits for filing tax disputes at various litigation levels, and accordingly withdraw cases below the threshold.
These are the new thresholds for the tax department to file appeals:
- Appeals to be filed in the Income Tax Apellate Tribunal or Customs Excise and Service Tax Appellate Tribunal, only if the tax amount involved is Rs 20 lakh or more, up from Rs 10 lakh at present.
- Appeals to 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.
This is a major step in the direction of litigation management of both direct and indirect taxes, as it will effectively reduce minor litigation and help the department to focus on high value litigation, the Finance Ministry statement said.
Union Minister Arun Jaitley had also tweeted yesterday, calling this an “excellent move”.
Reduction In GST Rate On Merit
The Goods and Service Tax Council, scheduled to meet on July 22, will consider cases of reduction in GST rates based on merit, Goyal said today.
“GST Council has already reduced rates on 328 items, so you may possibly find some chance in anything where there is a meritorious reason,” Goyal said, adding that reduction in GST rates needs to be balanced with revenue involved.