As finance minister Arun Jaitley prepares to present his maiden budget next week, one of the main concerns he has to address is escalating tax disputes. His party, the Bharatiya Janata Party(BJP), has also promised to end tax terrorism but the task requires a concerted effort. If he, however, starts working on the recommendations of the Tax Administration Reform Commission (TARC), headed by Parthasarathi Shome, it will go a long way in cleaning up the country's taxation scenario, which is excessively dispute-ridden.
In FY13, the total number of direct tax disputes that were pending in various courts was close to 2.7 lakh while the corresponding figure for indirect tax was 1.13 lakh. There are more than 733 direct tax cases pending with high courts for more than ten years. The success rate of the taxman in litigation is considerably lower than that of the taxpayer. Mumbai accounts for most of the tax disputes followed by Delhi and Pune.
Though there is little time to accommodate the TARC’s suggestions in the July 10 budget, Jaitley would do well to announce a roadmap to create a separate tax dispute resolution structure within the revenue department. This was even underlined in the BJP manifesto. Such a roadmap will provide a non-adversarial and conducive tax environment for investment in the country.