Govt Moves to Simplify Tax System: Thousands of Low-Value Appeals Withdrawn Under New Budget Limits

The Central Government of India is working hard towards making the tax system simpler and easier while also trying to limit disputes with taxpayers. Recently, Union Finance Minister Nirmala Sitharaman directed the Central Board of Direct Taxes (CBDT) to identify all tax appeal cases filed by the department where the disputed amount is less than the new revised monetary limit set in the Budget 2024-25 and withdraw them within three months. This step is meant to make tax administration more efficient, reduce the legal burden on taxpayers, and ease the pressure on the courts by cutting down unnecessary cases.

During the 166th Income Tax Day celebration held on July 24, the Finance Minister said while speaking to senior tax officials, “Good policies are not enough in themselves; the real meaning lies in their timely implementation.”

Key Revisions in Budget 2024-25:

The Budget 2024-25 has led to the introduction of a key amendment to the monetary limits for tax appeals. The amendments are as follows:

• The Income Tax Appellate Tribunal (ITAT)’s limit has been increased to Rs. 60 lakh from Rs. 50 lakh.
  For High Courts, the limit is from Rs. 1 crore to Rs. 5 crore and
  For the Supreme Court, the limit is from Rs. 2 crore to 5 crore.

These revised monetary limits have resulted in the withdrawal of 4,605 appeals. In 3,120 cases, appeals were not submitted due to falling under revised limits. These updated limits have allowed courts to be more focused on high-value disputes, matching the goals of the government for faster outcomes of legal actions.

Currently, around 5.77 lakh tax appeals are still due, and over 2.25 lakh cases are being shortlisted for resolution in the financial year 2025-26. These pending appeals involve tax disputes worth over Rs. 10 lakh crore. The Finance Minister has asked the CBDT to check the performance of each sector, speed up the resolution of these disputes, and find out the main reasons behind so many legal cases so that permanent solutions can be put in place.

Along with the aforementioned action, the Finance Minister appreciated the CBDT for its work on the draft Income Tax Bill and mentioned that 60,000 hours of work were spent to make the laws simpler and more modern. The new bill has been cut down from its original five lakh words to almost half, an amendment Finance Minister Sitharaman called “remarkable.”

This new measure is aimed towards making the administration system more transparent, reliable, and simpler. Finally, it has strengthened the trust of the public in the country’s tax system.