The Central Board of Direct Taxes (CBDT) notified the e-Dispute Resolution Scheme, 2022, on April 5, 2022, to handle tax issues involving small taxpayers. Taxpayers with total returned income up to Rs.50 lakh and income tax disputes up to Rs.10 lakh would be eligible for the initiative.
Taxpayers will not be needed to appear in person or through an authorized agent before tax officials in connection with any actions under this plan, and all contact will be done electronically.
The Dispute Resolution Committee (DRC) will be made up of three members: two retired officers from the Indian Revenue Service who have held the position of Commissioner of Income-Tax or higher for at least five years, and one serving officer not lower than the rank of Principal Commissioner of Income-Tax. These members will serve for three years.
How do I take advantage of this scheme?
Taxpayers who meet the above qualifications may submit an application electronically to the selected DRC along with a small fee. In circumstances where an appeal is already underway or filed before the Commissioner (Appeals), the application must be filed in Form 34BC and forwarded to the DRC’s official email ID, or within one month after the taxpayer’s receipt of the order in other cases.
The Dispute Resolution Committee (DRC) shall have three members: two retired Indian Revenue Service officials who have held the position of Commissioner of Income-Tax or higher for at least five years, and one serving officer with the rank of Principal Commissioner of Income-Tax. These members will serve for three years. Taxpayers who fit the conditions can online submit an application to the selected DRC, along with a small fee. The application must be filed in Form 34BC and emailed to the DRC’s official email address if an appeal is currently underway or filed before the Commissioner (Appeals), or within one month of the taxpayer receiving the order.
If the committee concludes that the dispute resolution application should be denied, it will send a notice to the taxpayer demanding that they show reason why their application should not be denied, along with a deadline for filing a response.
The decision of the committee on whether to approve or reject the application will be conveyed to the taxpayer’s registered email address. If the application is accepted, the taxpayer must produce proof of withdrawal of the appeal filed with the CIT(A) or application filed with the DRC within 30 days of receiving the communication. If you do not do so, your application will be rejected. If specific circumstances are met, the DRC will have the right to waive the penalty or give immunity from prosecution under the Act.
The Impact of the DRC on tax issues
Small taxpayers who use an alternative dispute resolution forum will be able to settle their tax problems at the initial level rather than going through the lengthy appeals procedure. Tax issues are expected to be settled more swiftly because the programme establishes a six-month time limit for the committee to decide on an application. These variables are likely to lessen the load of tax litigation cases on tax authorities and judicial tribunals, resulting in lower litigation costs and time for taxpayers and tax authorities. Authority under the Act to waive the penalty or grant immunity from prosecution if specific circumstances are met.
Furthermore, this settlement arrangement may result in the receipt of taxes that might otherwise be delayed owing to pending appeals. According to a notification shared with the Rajya Sabha on 5 April by the Ministry of Finance, more than Rs8.40 trillion in tax demands against individuals remained outstanding as of 1 April.
NRI tax payers benefit
Non-resident Indian (NRI) taxpayers who would otherwise have to rely on tax experts to represent them before the tax authorities may benefit from the e-Dispute Resolution Scheme, 2022. Because the processes will be conducted online, NRIs will be able to represent their case directly, and the resolution of tax disputes at the initial level will provide them with confidence regarding their taxation difficulties.
Potential difficulties ahead
Similar to faceless assessment proceedings, proceedings before the DRC may face practical challenges such as an over-reliance on written submissions, a possible compromise in the quality of dispute resolution due to pressed timelines, and technical difficulties with the IT infrastructure of the income tax online portal, among other things.
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