Government has proposed certain legislative and administrative changes with a view to reduce litigation in direct taxes. Announcing this in his maiden Budget Speech in the Parliament today, the Union Finance Minister Shri Arun Jaitley said that resident tax payers can now obtain an advance ruling in respect of their income tax liability above a defined threshold. He has also proposed to strengthen the authority for advance rulings by constituting additional benches. The scope of the Income Tax Settlement Commission shall be enlarged so that taxpayers may approach the Commission for settlement of disputes.

The Finance Minister noted that tax demand of more than ₹ 4 lakh crore is under dispute and is one of the serious concerns of taxpayers. Shri Jaitley proposed to set-up a high level committee to interact with trade and industry on a regular basis and ascertain areas where clarity in tax laws is required. He has also proposed certain changes in the transfer pricing regulations.

The Finance Minister hoped that these measures would go a long way in improving confidence of taxpayers in the tax system and would provide certainty and clarity in tax laws.

Advance rulings expanded for resident taxpayers to provide pre certainty on income tax liability; Settlement Commission scope broadened. Resident taxpayers can obtain an advance ruling on income tax liability above a defined threshold, additional benches will be constituted to strengthen the advance ruling authority, and the scope of the Income Tax Settlement Commission will be enlarged to allow taxpayers to approach it for settlement of disputes; a high level committee will consult with trade and industry and changes to transfer pricing regulations are proposed.