The Federation of Indian Chambers of Commerce & Industry (FICCI) has called for stronger deterrents against excessive litigation by tax officials in dispute cases, reported Hindustan Times.
The proposal includes IT department paying higher interest rates to taxpayers on their pre-deposits during a dispute.
This suggestion comes in light of data indicating that the Income Tax (IT) department’s success rate in tribunals and courts is below 25%.
FICCI presented its case to the Lok Sabha’s Select Committee, highlighting that the IT department’s litigation success rate is low, with only 7% in tribunals, 9% in High Courts, and 15% in the Supreme Court.
Its recommendation for higher interest rates on pre-deposits, ranging from 20% to 24%, is intended to discourage IT officials from initiating unwarranted cases.
The interest on pre-deposits is meant to compensate taxpayers for the duration of tribunal hearings.
Discussions within the committee also touched upon the IT department’s access to digital information of taxpayers and whether such actions are against data protection and privacy laws.
The panel, led by Indian lawmaker Baijayant Panda, is considering how the IT department’s powers align with privacy concerns.
Indian MP Nishikant Dubey defended the department’s rights to access digital information during raids and seizures, stating it is an extension of their existing powers.
Earlier in March 2025, the Lok Sabha select committee received recommendations from the Institute of Chartered Accountants of India on the Income Tax Bill 2025, which is designed to streamline the tax legislation.
The 31-member committee is expected to review the bill and submit a report before the next Parliament session begins.
