Tax talk: CAG busts myth of reduced tax disputes

Tax talk: CAG busts myth of reduced tax disputes

Despite a series of dispute resolution initiatives, including the latest ‘Vivad Se Vishwas’ scheme and oft-articulated commitment to reduce the backlog of litigation by withdrawing frivolous pleas, the government’s tax officers at the field level seem to have relented little when it comes to tax aggression.

The just-released Comptroller and Auditor General of India’s audit report with respect to the tax department, for the financial year 2018-19, revealed that the number of disputes and also the amounts locked up at various forums, including the tribunals courts, have only risen. The amount locked up in appeal cases with CIT-Appeals (Rs 5.63 lakh crore) in 2018-19 was more than the Centre’s revenue deficit in the year, the CAG observed.

Also, the auditor has noted a trend of increase in ‘demands difficult to recover’, in what reflects the taxman’s refusal to stop pushing cases lacking merit.
Also, “revenue impact of tax incentives” continued to be sticky at least until 2018-19 (last September’s corporate tax reforms may have addressed this issue to an extent), despite the government being vocal about the phasing out of exemptions/deductions and other sops to clean up the tax system. Revenues forgone on account of tax incentives were a considerable Rs 2,13,225 crore in 2018-19, and these have in fact risen from 18.3% of direct taxes collected in 2016-17 to 18.7% in 2018-19.