In a major step toward reducing litigation, the income tax department will focus only on select high-value cases. The Narendra Modi government on Wednesday sharply raised the monetary threshold limit for tax departments to file appeals in tribunals and various courts, a move to cut down the number of appeals against adverse rulings.  

Commenting on the development, Finance Minister Piyush Goyal, said that it is a positive development as reducing tax litigation across the board will significantly reduce costs. Explaining that the cost of litigation usually ends up being more expensive than recovery, he lauded the move terming it as a “big boost to Ease of living as well as Ease of Business.”  

The threshold for cases in the Supreme Court has been increased to Rs 1 crore from Rs 25 lakh, while for the high courts the monetary threshold is now Rs 50 lakh instead of Rs 20 lakh earlier.  

“This is a major step in the direction of litigation management of both direct and indirect taxes as it will effectively reduce minor litigations and help the department to focus on high-value litigations,” a finance ministry statement said. 

The finance ministry released further mentioned that in cases of Central Board of Direct Taxes (CBDT), out of total cases filed by the department in Income Tax Appellate Tribunal (ITAT), 34 per cent of cases will be withdrawn. In case of high courts, 48 per cent of cases will be withdrawn and in case of Supreme Court, 54 per cent of cases will be withdrawn.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 a substantial point of law is involved,” the ministry statement added. 

“If the monetary threshold for filing appeals is increased and a more pragmatic approach is adopted in picking up cases to be further litigated, it would go a long way in reducing litigation and save time and effort for both the taxpayers and the tax administration,” Vikas Vasal, national leader – tax, at Grant Thornton India told the Economic Times.  

Many analysts say the government’s latest move would help taxpayers and the tax administration, adding that the resources will be utilised more selectively to gain concrete results. 

Slams World Bank report critics 

Other than that, Piyush Goyal also commented on the World Bank report which said that India has become the sixth largest economy in the world. He said, "It is a response to that criticising the state of the Indian economy. India's macros are strong."

Goyal went on to say that the state of the economy is now positive but added that the government is preparing itself for any kind of future challenges.  "This government has taken steps in last 4 yrs to strengthen India’s macro indicators," he said. 

Last but not the least, Goyal said that the government is now aiming to further propel India's economy. "India has become the 6th largest eco but now aim to become the 5th largest economy," he said.