Sep 13, 2017 06:34 PM IST | Source:

I-T Dept sets deadline to resolve appeals involving Rs 50 crore or more

Recently, Prime Minister Narendra Modi had expressed concerns over the huge number of litigations involving the tax department.

The Income Tax Department has set an ambitious target for clearing the backlog of tax disputes, according to its ‘Vision 2020’ document.

Recently, Prime Minister Narendra Modi had expressed concerns over the huge number of litigations involving the tax department.

At the end of FY17, there were around 2.9 lakh appeals pending resolution, while 1.17 lakh appeals were disposed of during the same year. Around 28 percent of the pending appeals had been filed prior to March 2015.

The I-T has set a target to clear pending appeals (filed prior to April 2017) for a sum above Rs 50 crore by December 2017.

To improve tax collection, the tax department will be closely monitoring Tax Deducted at Source (TDS) statements of top 100 employers and monitoring monthly TDS remittance from salaries of both private sector firms as well as government departments.

The I-T feels banks have been lagging in deduction of TDS on interest to state governments, PSUs, corporations, autonomous bodies, and development authorities. E-commerce is another space the taxman will be keeping a close watch on.

“This (e-commerce) involves advertisement on portals/websites of various organized/unorganized agencies, payment for job work—building websites, translation of pages, data entry of text, research etc. This area promises to yield significant revenue,” the document says.

Tax officers have been asked to enforce the ‘Equalization Levy’, introduced in the 2016 Finance Act which has emerged as a new avenue for the department. Department Vision 2020 directs to keep an eye on the vendors of e-commerce which could be a large tax collection area. The department directs that work ‘equalization levy’ tax which is introduced in 2016 Finance Act.

The levy mandates that a person making payment to a non-resident, exceeding a payment of Rs 1 lakh in a year, for specified services, will withhold a tax of 6 percent and pay it to the government in the same manner as tax deducted at source.

“It is a tax that must be enforced due to its significance and future potential; the board may devise appropriate procedures for the enforcement of the levy,” the document says. The department has set the last week of September as the deadline for collating information and selection of cases for verification. The department has completed an analysis of unusually high deposits made during the demonetisation period and will be drawing up a list of people to be questioned.

On tax collection targets, the department has retained the targets outlined in Budget 2017. The Income Tax Department is targeting 22 percent higher personal tax collection this year over the last. Corporate tax collection is forecast to grow around 11 percent, while Securities Transaction Tax collection is expected to shrink by 14 percent.

The lower estimate for STT transaction is surprising, given the buoyancy in the stock market and surge in trading volumes. Overall, direct taxes are expected to be 15 percent compared to last year.


It was expected that demonetisation and GST would unveil the true incomes of many individuals, and help widen the tax base. Many businessmen had deposited huge piles of cash in banks during the demonetisation drive, claiming it as legitimate income from their businesses. Also, owners of mid-sized businesses who had not been disclosing their true income till recently, would be forced to give the correct picture once they registered on the GST network.

Both these measures were expected to expand the base of tax payers in the country. But the 22 percent targeted increase in personal tax collection means that either the initial expectation of a wider tax base has been off the mark, or that the taxman is not forecasting that increase to come through this year.

In the past, there have been years when personal tax collections have risen 15-18 percent. Compared to that, the forecast of a 22 percent increase does not appear to be all that high.

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