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4) Tax litigation takes a heavy toll on the economy and should be reduced. Discuss.(250 words)

Topic–  Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

4) Tax litigation takes a heavy toll on the economy and should be reduced. Discuss.(250 words)

The hindu


Why this question

The economic survey has highlighted the issue of high tax litigation in India and it is important to discuss the issue in detail.

Directive word

Discuss- this is an all-encompassing directive which mandates us to write in detail about the key demand of the question. we also have to discuss about the related and important aspects of the question in order to bring out a complete picture of the issue in hand.

Key demand of the question.

The question wants us to write in detail about the burden of tax litigation in the country, and describe the effects of this burden on the overall economy.

Structure of the answer

Introduction– write a few introductory lines about the  tax-litigation in India. E.g In March, 2017, there were approximately 1.37 lakh direct tax cases and 1.45 lakh indirect tax cases under consideration by the Income Tax Appellate Tribunal, high courts and Supreme Court.


  1. Discuss in points as to how unnecessary and huge tax-litigation takes a toll on the economy. E.g
  • The tax department is the largest litigant with almost 85% of direct tax cases arising out of its appeals.
  • The Department unambiguously loses 65% of its cases.
  • The government’s persistence with litigation despite high rates of failure was increasing the workload of the judiciary and adding to delays and pendency of cases.
  • This, takes a severe toll on the economy in terms of stalled projects, mounting legal costs, contested tax revenues, and reduced investment”.
  • The project costs are significantly increased.
  1. Discuss briefly how tax-litigation can be reduced. E.g
  • Dedicated subject-matter courts could have “profound benefits” as seen in the apex court’s recent experiment with constituting an exclusive bench for taxation produced impressive results.
  • This may be replicated for other subject matters, and emulated by other high courts

Conclusion- based on your discussion, form a fair and a balanced conclusion on the given issue.