Anita Kapur Advocates for Consistency in India’s Tax Regime to Reduce Litigation, ETCFO
Reducing tax litigation and restoring certainty in India’s tax regime does not require fresh statutory amendments, but stronger and more consistent implementation of existing laws, according to Anita Kapur, Former Chairperson, CBDT. Speaking at the fifth edition of ETCFO–ETBFSI Union Budget 2026 series, Kapur said that frequent disputes do not stem from gaps in legislation but from variations in how the law is applied at different levels of the tax administration. “When one assessing officer interprets a provision differently from another, or when appellate authorities take conflicting positions, it creates confusion and erodes trust,” she said.
Such inconsistencies, she added, leave taxpayers uncertain about their liabilities “The law as it stands today is a good law. What is required is that CBDT strengthens its own internal mechanisms so that a consistent view is taken,” Kapur said.
She pointed out that the government has already taken significant steps to protect small taxpayers from unnecessary litigation. With data-driven scrutiny, limited case selection and defined monetary thresholds for departmental appeals, the scope for harassment has reduced substantially. “Less than 0.5% of tax filers are subjected to scrutiny today. In most cases, taxpayers will never have to interact with the department,” Kapur said. However, the negative perception persists because high-value disputes involving large taxpayers often dominate public discourse.
On addressing corporate and international tax concerns, Kapur said CBDT has sufficient powers under the existing framework to issue binding circulars and clarifications. “If the Board takes a clear position and ensures that it is followed uniformly across the field, a large part of litigation will automatically come down,” she noted.
Kapur also highlighted the need for greater transparency in treaty interpretation. Drawing a comparison with global practices, she said, “When the US enters into a double taxation avoidance agreement, it issues a technical explanation alongside the treaty. This tells taxpayers exactly how each article and term will be interpreted.” India, she said, should adopt a similar approach, at least for treaty amendments, to reduce ambiguity for international investors.
Importantly, Kapur stressed that certainty in tax administration is as critical as certainty in tax policy. “You don’t need to keep changing the statute. What you need is predictability in how the law will be applied,” she said.
Stability over tinkering
Kapur’s foremost expectation from Budget 2026 is restraint. “I want stability, clarity and simplicity. I do not want any change in tax rates,” she said. With income up to ₹12 lakh effectively tax-free under the new regime and India’s per capita income still below ₹3 lakh, Kapur argued that current rates are already reasonable. Further reductions, she warned, could weaken an already narrow tax base.
Citing official data, Kapur highlighted that out of over eight crore tax filers, nearly five crore pay zero tax. “Out of 1.48 billion people, when 75% are above the age of 15, this is a very small taxpayer base. Reducing tax rates further when compliance itself is limited is not the solution,” she said.
Equally critical of exemptions, Kapur cautioned against cluttering the tax code. “Exemptions increase litigation. They are inefficient and result in tax expenditure without knowing how effectively they operate on the ground,” she said. If the government wants to support a sector, she argued, it should do so through direct and monitorable policy instruments rather than tax carve-outs.
