The latest report from the Parliamentary Standing Committee of Finance has highlighted a growing concern over the increasing number of direct tax appeals pending at the Tax Tribunal, High Court, and Supreme Court (see table below).
Rising Numbers: Pending tax cases have surged from 51,567 in FY 2021-22 to 64,311 in FY 2023-24, with INR 14.2 lac crores locked in litigation.
Tax Tribunal: Although the number of appeals at the Tax Tribunal decreased from 21.8k to 20.2k, the amount involved skyrocketed from INR 2.9 lac crores in FY 2022-23 to INR 8.6 lac crores in FY 2023-24.
The Committee has emphasized the urgent need to address the backlog and complexities in tax dispute resolution. It has recommended studying global best practices to expedite dispute resolution, reduce litigation costs, and enhance taxpayer confidence.
Further, the Committee has also suggested that in order to double the direct tax to GDP ratio, the government should focus more on broadening the tax base and including those who are still outside the tax net before resorting to deepening the tax base.
