Nirmala Sitharaman outlines Indian tax reforms to reduce litigation

Union Finance Minister Nirmala Sitharaman announced that the Indian central government is focusing on structural reforms to fundamentally reduce tax litigation rather than simply managing existing backlogs. Speaking at the 8th International Tax Conference in Bengaluru, Sitharaman stated the goal is to make voluntary compliance easier while reserving enforcement capacity for essential cases.

Key measures highlighted include the ‘Vivad se Vishwas’ schemes, which allow taxpayers and the government to settle long-standing disputes. Additionally, the monetary thresholds for departmental appeals were raised in 2024 to Rs 60 lakh for appellate tribunals, Rs 2 crore for high courts, and Rs 5 crore for the Supreme Court.

Sitharaman also detailed broader tax trajectory shifts, such as the 2019 corporate tax cut to 22 per cent and the planned 2025 rationalisation of individual income tax rates, where individuals earning up to Rs 12 lakh annually will face no tax liability. Further reforms include the consolidation of the Goods and Services Tax (GST) into two primary rates by 2025 to reduce classification disputes.