Government raises monetary limits for tax litigation

New Delhi : In a bid to minimise litigation pertaining to tax matters, the government on Wednesday decided it will not file any appeals in appellate tribunals, High Courts and the Supreme Court in cases involving an amount less than Rs 20 lakh, Rs 50 lakh and Rs 1 crore respectively.

The earlier limit for filing an appeal in appellate tribunals was Rs 10 lakh while it was Rs 20 lakh for High Courts and Rs 25 lakh for the Supreme Court.

The Finance Ministry's decision would lead to withdrawal of 41 per cent of existing cases related to direct taxes and 18 per cent of cases related to indirect taxes.

"This step will also reduce future litigation flow from the department side," an official statement said.

It added that the decision will effectively reduce minor litigation and help the department to focus on high value litigation.

In case of Central Board of Direct Taxes, out of total cases filed by the department in Income Tax Appellate Tribunal (ITAT), 34 per cent of cases will be withdrawn.

In case of High Courts, 48 per cent of cases will be withdrawn and in case of Supreme Court, 54 per cent of cases will be withdrawn.

"The total percentage of reduction of litigation from department's side will get reduced by 41 per cent. However, this will not apply in such cases where substantial point of law is involved," the Finance Ministry said.

Similarly, in case of Central Board of Indirect Taxes and Customs (CBIC), out of total cases filed by the department in Customs, Excise and Service Tax Appellate Tribunal (CESTAT), 16 per cent of cases will be withdrawn.

In case of High Courts, 22 per cent of cases will be withdrawn and in case of Supreme Court, 21 per cent of cases will be withdrawn.

The Ministry said that the decision was taken in order to reduce the long pending grievances of taxpayers and to minimise litigation pertaining to tax matters and to facilitate "Ease of Doing Business".