Aim Of IT Bill To Cut Down Litigations: Finance Ministry Official
Aim Of IT Bill To Cut Down Litigations: Finance Ministry Official
Strap – He was speaking at a post-budget analysis hosted by the Bangalore Chamber of Industry and Commerce and audit and consulting firm Deloitte
K Balasubramanian, Joint Secretary, Ministry of Finance has stated that the government is bent on making Income Tax (IT) laws taxpayer-friendly, by simplifying the language to reduce tax disputes and litigation.
During the Union Budget 2025 speech, Minister for Finance and Corporate Affairs, Nirmala Sitharaman said she would present a new IT bill, which would carry the same spirit of ‘Nyaya’.
"The new bill will be clear and direct in text, close to half of the present law, in terms of both chapters and words. It will be simple to understand for taxpayers and tax administration, leading to tax certainty and reduced litigation," she added.
While speaking at a post-budget analysis hosted by the Bangalore Chamber of Industry and Commerce (BCIC) and audit and consulting firm Deloitte, the finance ministry official clarified that the new bill was not intended to end the old tax regime or withdraw deductions and incentives.
He explained that the revenue department received over 10,000 suggestions many of which were incorporated into the bill to be tabled in the Parliament.
Apprising the need for added incentives for different sectors in the Income Tax Act, the secretary clarified, "It is not practical to introduce new sector-specific incentives, whether for healthcare or infrastructure, as the corporate tax rate has already been reduced from 30 percent to 22 percent. This lower headline rate should replace the need for incentives, which previously led to litigation and misuse."
Speaking on the Finance Bill and acknowledging the pendency of litigation at the Commissioner of Appeals level, the joint secretary said, "We have made a lot of changes in the provisions of the Act and in administrative actions, to speed up case resolution.”
He added that the government would observe the situation over the next 6-9 months before taking further action.
On the proposed Transfer Pricing (TP) assessment model in India differing from the global block assessment approach, the official said the intent was to move towards it but India may not be able to implement it immediately. The assessments were closely linked to regular tax assessments, and it was not easy to separate them.
While stating that 50 percent of the cases had identical issues year-on-year, he added, "As a first step, by the time the assessment for one year is complete, two more years of returns would be filed. This allows us to apply the same TP principles from the first year to the next two years, reducing the need for reassessments.”
He said the government would shift from a random selection of TP cases to a risk-based TP assessment approach.
Balasubramanian expressed, "Instead of evaluating 4,000 cases annually in isolation, we aim to cover a larger number of assessees over a three-year cycle, reaching at least 7,000-8,000 entities. This will help provide early certainty to more taxpayers, allowing them to plan their compliance better.”
He said the government was deliberating on the demand to exempt the Goods and Services Tax (GST) from health insurance premiums.
The official remarked, "Insurance companies themselves have concerns about losing the Input Tax Credit (ITC), which could lead to higher premiums. We intend to ensure a balanced approach where the exemption benefits all stakeholders, insurers, healthcare providers and consumers."
