Breaking India’s tax litigation gridlock
Subscribe to enjoy similar stories. The past few Union budgets have consistently acknowledged the problem of growing income tax disputes and litigation. Over time, various measures have been announced to tackle the high level of pendency at various forums but the progress in reducing disputes remains slow.
Consider this. Of the Central Board of Direct Taxes’ (CBDT) total tax demand of about ₹42.3 trillion in financial year 2023-24, about 74%, or ₹31.4 trillion, was under dispute, as per the parliamentary standing committee’s report in December. The largest pendency in litigation lies at the first appellate level—the Commissioner of Income Tax (Appeals).
In FY 2018-19, about 335,000 disputes were awaiting disposal by the CIT(A). This increased to nearly 550,000 cases in FY 2023-24, as per the CBDT Central Action Plan 2024. The CIT(A) disposed of more than 110,000 cases in FY 2023-24, only to be swamped by over 140,000 new appeals instituted during the year.
In FY 2021-22, disputes over tax demands amounting to over ₹14 trillion were stuck at the CIT(A). The numbers clearly bring out the urgency for focused measures, combined with capacity building of the tax department, to reduce and avoid tax disputes. Also read | How the upcoming budget can reduce pending tax appeals, ease financial burden on small taxpayers To address the pendency at the CIT(A), the government created 100 posts of Joint Commissioner (Appeals) and raised the appeal disposal targets to a minimum 600 cases for 2024-25.
While these are helpful, given the large number of cases, more needs to be done for time-bound disposals. Appellate matters are complex. Under the faceless appeals format, greater technical and administrative support to CIT(A)/JCIT(A) may
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