Brace for extra ‘insignificant’ tax disputes – Instances of India

MUMBAI: The Central Board of Direct Taxes has expanded a listing of exceptions for submitting of appeals by IT division with tax tribunals and courts, permitting appeals to be filed even for ‘insignificant’ sums, in accordance with a latest round. CBDT has, nonetheless, maintained the threshold limits for submitting appeals.
The exceptions embrace issues associated to bogus capital beneficial properties/loss from penny shares and instances of lodging entries, disputes regarding numerous elements referring to TDS or TCS, tax assessments primarily based on data from legislation enforcement and intelligence authorities, concerning tax treaty applicability and equalization levy (dubbed as Google tax).
Tax consultants view {that a} wait-and-watch strategy is required, however the broad listing of exceptions might result in elevated litigation for people, Indian companies, and abroad entities.

In August 2019, CBDT had revised the bounds to Rs 50 lakh, Rs 1 crore and Rs 2 crore for submitting of appeals by the IT division with the earnings tax Appellate Tribunal, excessive courts, and the SC, respectively. Barring the now expanded listing of exceptions, the IT division can file appeals at greater judicial boards provided that the ‘tax impact’ exceeds these thresholds.
In easy phrases, ‘tax impact’, means the distinction between the tax on the full earnings assessed by the IT division and the tax levy with out contemplating the disputed earnings. Govt officers, that TOI spoke with, contend that the prevailing thresholds are affordable and that increasing the listing of exceptions was vital.
A taxpayer factors out that there’s a proliferation of WhatsApp teams that draw harmless buyers into shopping for and promoting shares of sure corporations — which can transpire to be penny shares. The capital beneficial properties/loss made by them are real and they don’t seem to be a part of any organized tax evasion exercise. Nevertheless, now even for insignificant beneficial properties or losses, the IT division can attraction and extend the litigation. Issues associated to statutes that now not exist akin to wealth tax, fringe profit tax are included within the exception listing, as is equalization levy.
Gautam Nayak, tax companion at CNK & Associates factors out that litigation has a price for the taxpayer and the division. It additionally has a bearing on investor sentiment. “Litigation on insignificant sums might ship the unsuitable sign. Maybe, issue-based limits might have been set.” Nayak famous that some exceptions carved out might impression India Inc and its worldwide enterprise companions.