Calling it the biggest litigant in the entire Government, Finance Minister Pranab Mukherjee has asked the Income Tax Department to reexamine the way it handles tax disputes. He said, the Department is filing appeals in a routine manner without careful thought and examination leading to the Income Tax Department earning the dubious distinction of being the biggest litigant in the Government of India.
Mr Mukherjee was speaking at the 150th anniversary of the Income Tax in India in New Delhi on Saturday. He said some of the appeals filed by the Department have been dismissed by the courts on account of inordinate delays. The Finance Minister said, these issues require a re-look at the system of legal and judicial management.
He said that there must be institutional arrangements to address tax disputes to the satisfaction of both taxpayers and tax collectors so as to reduce the number of litigations to a minimum.
The Finance Minister said that the proposed Direct Taxes Code, expected to replace the Income Tax Act from the next fiscal, will provide a taxation regime which is simple and broad based and in turn will lead to lower tax rates, better tax compliance and reduced litigation.
He said a Bill on the code will be tabled in the upcoming session of Parliament starting on Monday.
The Finance Minister said that the annual growth of direct taxes has averaged about 24 per cent in the last five years. Mr Mukherjee said, with the Indian economy poised to grow at 8.5 per cent in the current fiscal, we expect the growth to regain its past buoyancy. The Finance Minister also hoped that the economy will grow by nine per cent next fiscal and will cross the barrier of double-digit growth soon after that.