Supreme Court Tackles Direct Tax Litigation with Key Resolutions

Supreme Court's Impact on Direct Tax Litigation

In a significant move, the Supreme Court on September 24 resolved 573 direct tax cases where the tax impact was below Rs 5 crore. This decision is part of a larger initiative aimed at reducing tax litigation, aligning with the newly established monetary thresholds laid out in the Union Budget 2024-25.

Revised Monetary Limits for Direct Taxes

• The Unity Budget 2024-25 raised monetary limits for filing appeals:
• Rs 60 lakh for Income Tax Appellate Tribunal (ITAT)
• Rs 2 crore for high courts
• Rs 5 crore for the Supreme Court

The Central Board of Direct Taxes (CBDT) and Central Board of Indirect Taxes and Customs (CBIC) have taken necessary actions following these new limits.

Expected Impact on Current Cases

This adjustment is projected to lead to the withdrawal of an estimated 4,300 cases from judicial forums—including 700 from ITAT, 2,800 from high courts, and 800 from the Supreme Court.

Additionally, the monetary limits for appeals in indirect tax matters have seen similar enhancements, expected to withdraw 1,050 cases from the judicial system, thereby significantly reducing the litigation burden and hastening dispute resolutions.

Government's Commitment to Ease of Doing Business

The Finance Ministry voiced that these milestones resonate with the government’s goal of diminishing tax litigation and fostering an ease of doing business. This initiative ensures better taxpayer experiences while fostering a more conducive environment for businesses.