CBDT will issue scheme for Budget proposal to dispose small appeals: Chairperson Nitin Gupta

The Central Board of Direct Taxes (CBDT) will soon come out with a scheme on the Budget announcement of reducing pendency of appeals related to TDS default issues, board chairperson Nitin Gupta said.

In her Budget speech on Wednesday, Union Finance Minister Nirmala Sitharaman said she proposes to deploy about 100 joint commissioners of the Income Tax department for disposal of small appeals and to reduce the pendency of appeals at the commissioner level.

"We will come up with a scheme, the appeals dealt here will be mainly relating to TDS (tax deducted at source) default, the orders on TDS default, the orders on the processing of return of income where we feel that it requires adjustment and the taxpayer feels otherwise...there could be cases of small income (under dispute)," Gupta told PTI during a post-Budget interview.

The scheme will aim to expedite the process of disposal of appeals by the first appellate authority, which is the Joint Commissioner for Appeals, he said.

Under the Income Tax scheme, an order issued by the tax authority can be challenged by the taxpayer first before an officer holding the charge of Commissioner (Appeals) followed by appeals to the Income Tax Appellate Tribunal (ITAT), the High Courts and the Supreme Court.

The CBDT chief said the board will "divert" manpower from its present cadre to man the 100 posts of joint commissioner for this purpose.

Talking about another Budget proposal of the taxman being "more selective in taking up cases for scrutiny of returns already received this year", Gupta said this was doable because of the increased use of technology tools by the tax department and introduction of measures such as the e-verification and ITR-U.

The intent behind this proposal, announced by the finance minister, is that "we are now better equipped in terms of technology to identify cases which have more potential", he said.

Technology is enabling the department to look at the mismatches -- in returns filed by the taxpayer and data available with the tax authority -- and deepen and widen the tax base, Gupta said. He said about 10 lakh updated returns (ITR-U) have been filed by taxpayers till now.

"We are of the view that we can pick better cases for scrutiny... selection of cases can be more incisive and more specific and mismatch can be taken care through the route of e-verification. This will help to reduce litigation too," the CBDT chief said.

According to officials, the tax department currently picks a very "miniscule" number of cases, post filing of the returns, for limited or full scrutiny where an assessee is supposed to provide a number of documents, proofs and explanations to satisfy queries.

The Budget presented by the Union government last year permitted taxpayers to update their ITRs within two years of filing, subject to payment of taxes, a move aimed at helping correct any discrepancy or omissions.

A taxpayer would be permitted to file only one updated return per assessment year.

E-verification denotes the process to verify information received from various reporting financial entities with the details filed in the income tax returns by the taxpayers.

Gupta said the provisions for taxing the earnings of online gaming will kick in from July 1 this year. "The online gaming industry is an upcoming industry...startups have invested into it. There was confusion in the way the law was drafted and, therefore, a sort of evasion was seen," he said.

"So, now the law is tweaked and it is proposed that TDS provisions will be applicable on netting (net income) basis," he said.

The TDS will be applicable anytime when a person playing the online game withdraws their money from a wallet or at the end of the financial year, Gupta said.

The CBDT chairperson said whatever is the net winning of such a game, 30 per cent TDS will be deducted on it.

It is just that the threshold of Rs 10,000 has been done away with and it does not affect the industry or the person who plays the game, he said.

Gupta said the provisions for taxation under this head "will be made separately" to clarify issues.

The Budget 2023-24 proposed to introduce two new provisions for Tax Deducted at Source (TDS) on online gaming -- levy of 30 per cent on payment of net winnings in a financial year and removal of the current Rs 10,000 threshold for the levy of TDS.