Streamlining Tax Dispute Resolution: The Rise of Internal Board of Settlement in India and Impact on Taxpayers of Abolishment of Income Tax Settlement Commission


The article discusses the establishment of the Internal Board of Settlement (IBS) under the Income Tax Act of 1961, its role in resolving tax disputes, and its impact on taxpayers. The article also highlights alternative settlement mechanisms available after the abolishment of the Income Tax Settlement Commission in India.

Internal Board of Settlement (IBS):

The IBS is a quasi-judicial body that provides a fast and efficient mechanism for resolving tax disputes between taxpayers and the tax authorities. It comprises of senior tax officials who are appointed by the Central Board of Direct Taxes (CBDT) and have extensive knowledge and experience in tax law.

Replacement of Income Tax Settlement Commission (ITSC):

The ITSC was another mechanism established under the Income Tax Act of 1961 to settle tax disputes. The IBS has now taken over the functions of the ITSC. The IBS is expected to be more efficient and cost-effective than the ITSC as it comprises of senior tax officials who are already on the government’s payroll.

Impact on Taxpayers:

The abolishment of the ITSC and the establishment of the IBS had a significant impact on taxpayers. The IBS is expected to process cases faster than the ITSC, which would lead to quicker resolution of disputes. This would be beneficial for taxpayers who can avoid prolonged litigation and settle their tax disputes in a timely manner.

Adverse Impact:

The closure of the ITSC may have some adverse impacts on taxpayers in India. With the closure of the ITSC, taxpayers may face longer waiting periods for the settlement of their disputes. In addition, the ITSC had the power to grant immunity to taxpayers from prosecution under criminal law, which the IBS does not have.

Other Alternative Settlement Mechanisms:

Apart from the IBS, there are other settlement mechanisms available to taxpayers after the ending of the Settlement Commission under the Income Tax Act in India. These mechanisms include the Mutual Agreement Procedure (MAP), Advance Pricing Agreement (APA), and the Dispute Resolution Panel (DRP).


The author, Archit Goyal is a fellow member of the Institute of Chartered Accountants of India, with over a decade of experience in the fields of income tax and tax litigation. He can be reached at

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February 2024