The Income Tax and Wealth Tax Settlement Commission of India

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By Shamima Siddique
The author is Director (Media & Communication)

New Delhi, Nov 28, 2011 (Washington Bangla Radio / PIB India) A High-Level Alternative Dispute Resolution Body

  •     Mandated to resolve tax disputes by serving as a neutral mediator.
  •     Consensus rather than conflict, as the main approach.
  •     Objective is to allow non-habitual tax offenders to come clean.
  •     Orders of the Commission are final and conclusive.

Achievements by the Income Tax Settlement Commission

  •     35 years of successful performance as apex ADR body for direct tax disputes.
  •     With 4 benches at Mumbai, New Delhi, Chennai and Delhi, it has resolved over 4500 cases of tax disputes in last 10 yrs and over 15000 cases in its life-time.

Reduction of Tax Compliance costs

  •     Each case before Commission may involve proceedings for an average number of 6 Assessment years.
  •     Each assessment year may have assessment and Penalty proceedings and many procedural actions.
  •     These proceedings are to be defended before various  Appellate authorities, which may take 5-7 years.
  •     In its life-time Commission could help reduction of at least 1.35 lakhs tax proceedings of various nature.
Achievements:Significant Revenue Collection
  •     The incremental revenue gain for the Income Tax Department after protracted litigation before various appellate authorities is insignificant.
  •     On the other hand, the revenue gain through disclosure before the Commission and subsequent enhancement by the Commission is significant.

Revenue Gain through Settlement (Data for the year 2010-2011)

In 400 cases settled by the Commission:

  •     Returned income was:                                                            Rs. 206 Crores.
  •     Income finally settled by the Commission was:                     Rs. 595 Crores.
  •     Net Revenue Gain was:                                                          187%.

Generally, upto 20% of the additions to income made by the Income Tax Authorities get sustained before the appellate authorities/Judiciary.

Time-Bound Conclusive End To Tax Disputes

  •     Settlement Commission is required to pass settlement order in respect of all proceedings included in an application within 18 months.
  •     In the regular channel, each proceeding may take several years to conclude.
Assured Upfront Tax Payment
  •     Before filing settlement application, taxpayer is required to pay full amount of tax and interest on the income disclosed before the Commission.
  •     In the regular channel, actual full tax collection is not assured till proceedings are sustained by the appellate authorities, which may take 5-7 years.
  •     Net present value of tax collected very high in case of Settlement Commission.
Vision of Settlement Commission

  •     3 new Benches announced by the Finance Minister in 2011. Likely to be set up in New Delhi(2) and Mumbai(1).
  •     Use of IT to monitor settlement application
  •     Interactive website ( with cause-list.

 The Commission was outcome of the recommendations of  WANCHOO COMMITTEE (1971) which conceived of the Commission as a mechanism for providing room for settlement and compromise for one-time tax evaders or unintended defaulters.

(PIB Features)

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