I-T issues record refunds in Q1

Move to increase threshold for tax disputes likely to reduce litigation by 66%

The income tax department has issued record refunds of ~700 billion in the first quarter of 2018-19, Finance Minister Piyush Goyal said on Thursday. This was 26 per cent more than the refunds of ~555.2 billion issued in April-June of 2017-18.

How would this affect tax collections remains to be seen as the figures have not been released.

The ministry’s move to increase the threshold for tax disputes would lead to a 66 per cent reduction in cases under litigation. However, that would mean reduction in the stuck up amount by only 1.8 per cent.

The ministry’s step will help cases stuck in litigation and small and medium businesses, he said.

“Small- and mid-sized taxpayers will benefit with the increase in threshold limit for filing appeals as they can now focus on doing business rather than litigation,”

Goyal said.

In order to reduce litigation, the government on Wednesday hiked the threshold limit for filing appeals in tribunals to ~2 million, while the same for High Courts and the Supreme Court has been raised to ~5 million and ~10 million, respectively.

With this, tax litigation in the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC) will be reduced by 41 per cent and 18 per cent, respectively, added Goyal.

Nearly 30,000 cases will be withdrawn from various litigation fora, reducing tax dispute cases by 37 per cent.

“In case of the CBDT, the withdrawal of 41 per cent of the cases will have a revenue impact of ~48 billion in absolute terms, while in case of the CBIC, withdrawal of 18 per cent of cases will have a revenue impact of ~8 billion,” he said.

The CBDT will withdraw 34 per cent of cases stuck at tribunals, 48 per cent of those stuck in High courts and 54 per cent in the Supreme Court.

The CBIC will withdraw 16 per cent cases from tribunals, 22 per cent from High courts and 21 per cent from the Supreme Court.

However, this will not apply in cases where the substantial point of law is involved, the ministry had said on Wednesday.

The Economic Survey 2017-18 had said tax litigation cases stems from government persisting with litigation, despite high rates of failure at every stage of the appellate process.

Tax departments have contested several tax disputes but with a success rate of below 30 per cent, the Survey had noted.

On India overtaking France as the sixth-largest economy, Goyal said foreign investors were looking at the country with a positive attitude.

When the times are good, the government should prepare itself for tougher times, he said, when asked about the headwinds presented by high oil prices and a possible trade war.

“GST COUNCIL HAS ALREADY REDUCED RATES ON 328 ITEMS, SO YOU MAY POSSIBLY FIND SOME CHANCE (OF RATE REDUCTION) WHERE THERE IS A MERITORIOUS REASON. IT HAS TO BE IN BALANCE WITH REVENUE CONSIDERATION” PIYUSH GOYAL, Finance Minister