The Government has revised the thresholds for filing appeals in tax cases to reduce the litigation backlog in the country. This threshold is related to ‘tax effect’, the quantum of tax that will be payable as a result of the assessment. Following the decision, the limits will be revised as below:
Appeal to Income Tax Appellate Tribunal (ITAT)
Increased from Rs 10 lakh to Rs 20 lakh
Appeal to High Court
Increased from Rs 20 lakh to Rs 50 lakh
Appeal to Supreme Court
Increased from Rs 25 lakh to Rs 1 crore
The revised threshold will apply to appeals by the government and not by the opposite party. In other words, the rule changes do not take away your rights to appeal in cases involving lower amounts if the decision goes against you. However, the government will not appeal cases involving lower amounts if the decision goes against it.
The rules changes will also apply to the existing appeals. They are expected to lead to the withdrawal of a significant number of cases pending in various courts and tribunals. It is expected that a 41% cases relating to direct taxes and 18% cases relating to indirect taxes will be withdrawn as a result of the move.
However, the new rules will not apply if a substantial point of law is involved.