BENGALURU: Union Finance Minister Nirmala Sitharaman stated that the central government has focused its structural tax reforms on fundamentally reducing tax litigation rather than merely managing dispute backlogs. She urged industry representatives and policy researchers to elevate public discourse by proposing workable, quantified statutory alternatives.
Speaking at the International Tax Research and Analysis Foundation (ITRAF) 8th International Tax Conference in Bengaluru today, the Finance Minister said, “The philosophy is simple: make voluntary compliance easier and reserve enforcement capacity for cases that genuinely require it. We have aimed at reducing tax litigation rather than merely managing it.”
“Vivad se Vishwas schemes provided taxpayers and the government an opportunity to close old disputes rather than litigate them indefinitely. At the same time in 2024, the monetary threshold for departmental appeals was raised to Rs 60 lakh before the appellate tribunal, Rs 2 crore before the high courts, and Rs 5 crore before the Supreme Court,” she added.
Sitharaman detailed the broader trajectory of direct and indirect tax reforms undertaken by the Centre, noting the corporate tax cut to 22 per cent in 2019, the rationalisation of individual rates in 2025 where an individual pays no income tax on an income of Rs 12 lakh, and the replacement of the 1961 Income Tax Act with a concise, plain-language code drafted in six months without disturbing the overall tax burden.
She also cited the consolidation of the Goods and Services Tax (GST) into essentially two primary rates in 2025 as a major litigation reform that curtailed classification disputes.
Addressing the nature of pre-budget submissions, the Finance Minister observed that institutional representations routinely narrow down to requests for rate reductions, exemptions, or concessions.
She urged bodies to submit qualified, impact-assessed cases for reform that rise above sectoral interests to support the journey toward Viksit Bharat 2047.
“So, I wish to hear a submission that says, ‘here is a provision that no longer serves the tax system and ought to be removed even though we presently benefit from it’,” Sitharaman said.
“If a provision is said to impose an excessive compliance burden, tell us how many taxpayers it affects, how much time or cost it imposes, and what an alternative would mean for revenue. If a change is proposed, show us not only who gains from it but also its consequences for the tax base itself, administration and other taxpayers,” she noted, adding that professionals should also point out potential unintended consequences.
Pointing to international tax architecture, Sitharaman recalled treaty renegotiations with Mauritius, Singapore, and Cyprus to restore India’s source-based capital gains taxation rights, the implementation of General Anti-Avoidance Rules (GAAR), the Multilateral Instrument, and the expansion of the Advance Pricing Agreement (APA) program alongside new safe harbour provisions.
Sitharaman urged ITRAF to transition from quiet commentary to visible independent research akin to international bodies like the UK’s Institute for Fiscal Studies and the Netherlands’ IBFD, providing rigorously examined choices to enrich India’s economic framework.
