Context
CBDT has recently launched the e- Dispute Resolution Scheme, 2022 aimed at cutting down the legal cases and providing relief to the taxpayers. This initiative is one of the approaches towards the reform of the structure of the resolution of the tax dispute in India, aimed at higher efficiency of the procedures associated with income tax assessments.
Overview of the e-DRS, 2022
The e-DRS is an online tool that is intended to allow eligible taxpayers to resolve their claims through electronic means thus reducing the strain of litigation between the taxpayer and the revenue authorities. The scheme is available for appeals to be made against such specified orders as referred under section 245MA of the Income-tax Act, 1961.
Objectives of the e-DRS
- Minimize Litigation: The major aim for the implementation of the e-DRS is to minimize the number of cases that reach the protracted litigations that may delay and end up being expensive to both the taxpayers and government agencies.
- Provide Relief to Taxpayers: The e-DRS will thus reduce pressures on the taxpayers who are involved in disputes with the tax department and reduce the monetary costs.
- Enhance Efficiency: This has made it easier to sort out the applications and the resolutions made since it is an electronic system of the scheme.
Key Features of the e-DRS
Eligibility Criteria
To qualify for the e-DRS, taxpayers must meet specific conditions:
- Consistent with the specified order, aggregate sum of variations proposed or made by the applicant shall not exceed ₹ 10 lakhs.
- The returned income related to such assessment year should not exceed ₹ 50,00,000.
- The specified order should not depend on search/surveys or information obtained under the international agreement Acts section 90 or 90-A of the Income-tax Act.
Application Process
There are different methods of filing applications which can be done telematically through the Income Tax portal for the taxpayers. The application must be filed within one month of receipt of the specified order or by 30 ‘th of September, 2024, if an appeal is pending in the case.
Structure of Dispute Resolution Committees (DRCs)
As of now, CBDT has constituted Dispute Resolution Committees (DRCs) in all the eighteen principal commissionerates. Every DRC is supposed to deal with claims that may arise under the e-DRS.
- Powers of DRCs: The DRCs have the powers to alter changes in specific orders, permit reduction or expulsion of penalties and offer immunity against prosecution under certain circumstances.
- Timely Resolution: The DRC is under regulatory obligation to make its order within six months from the end of the month in which the application for dispute resolution has been lodged.
Benefits of the e-DRS
For Taxpayers
- Reduced Legal Costs: Thus, through the e-DRS, any existing disagreement between the taxpayers and the director of tax appeals can be settled thus eliminating the need for the long and expensive court process.
- Faster Resolutions: Compared to the more conventional manual approach, the templates used in the e-DRS system mean that more disputes can be addressed in a shorter time.
- Immunity from Prosecution: The e-DRS still requires that certain conditions be met by the taxpayers and these conditions may include immunity from prosecution of issues that were addressed by the e-DRS.
For Tax Authorities
- Less Burden on Courts: Thus, the e-DRS assists in reducing the number of cases that end up in the courts hence enhancing proper utilization of the judicial resources.
- Improved Tax Compliance: When I establish the e-DRS, it creates confidence among the taxpayer to ensure that they obey the laws of the tax since there will always be a channel of solving the dispute.
Conclusion
That is the reason why the e-Dispute Resolution Scheme (e-DRS), 2022 is one of the biggest achievements of Indian tax authorities. In this context, the CBDT proposes e-dispute-resolution system is also expected to reduce litigation, render relief to the taxpayers and make the Indian tax administration more effective. With increased awareness of this scheme among the taxpayers, the scheme is expected to help fashion fair and quick resolution of tax disputes. If we are to focus on the intended benefits of the identified initiative, then we must note that this is not only a measure that highlights the government’s efforts to enhance taxpayer services, or the need to support tax payers with fair and respectable methods of solving the disputes arising in the course of implementing tax laws, but also serves a major step towards encouraging cooperation from the part of the taxpayers.
Source: BS