The government is looking to address taxation-related pain points and cut down the number of tax litigations, while focusing on some of the major issues that may lead to revenue generation, people familiar with the development said. 

The Central Board of Direct Taxes (CBDT) has formed a four-member committee, headed by income tax commissioner Sanjeev Sharma, to look into the matter and submit its final report and recommendations by mid-March. 

The committee is looking to tackle the issue in a two-prong way — addressing some current pain points and recommending some steps borrowed from international best practices, people in the know said. 

Its recommendations could include applying a filter for tax officer before a notice is issued and setting a time limit for concluding an investigation, they said. The panel has started inviting recommendations for best international practices on litigation management. 

The tax department is one of the biggest litigators in the country at present, but it ends up on the losing side in majority of the cases, tax experts said. 

As per government figures, 465,349 cases related to taxation are pending at various forums. Of this, about 1% cases are high value cases and constitute about 90% of the total tax demand. 

The government could take a relook at streamlining some of the quasi-judicial forums and set up a separate redressal mechanism that acts as preventing litigation, people in the know said. 

While Authority of Advance Ruling was introduced for the same purpose, many complain that several recent AAR rulings have led to litigation. 

Insiders said the government is also concerned about how it should tackle taxing digital companies. It has already introduced equalisation levy and is set to introduce rules around significant economic presence to tax digital companies. 

The government could also look to introduce peer review for tax officers, people in the know said. #casansaar (Source - PTI, Economic Times)