Sitharaman asks industry to name tax provisions that should go

The brief

Context

At the International Tax Research and Analysis Foundation's (ITRAF) 8th International Tax Conference in Bengaluru, Finance Minister Nirmala Sitharaman urged tax professionals and industry bodies to stop confining their submissions to demands for lower rates and exemptions, and instead point to provisions that should be scrapped — even ones from which their own sectors benefit. She framed the government's tax reform approach as aimed at reducing litigation at source rather than merely managing the existing backlog of disputes. She also updated the status of GST 2.0, saying rate rationalisation has been done while process reforms go to the GST Council meeting scheduled for October 7, and flagged the difficulty of taxing the digital economy, crypto, cloud computing and the space sector.

Key facts

• Sitharaman spoke at ITRAF's 8th International Tax Conference in Bengaluru, asking industry to identify tax provisions that should be removed, including ones benefiting their own sectors.
• She asked for evidence-based, quantified proposals stating number of taxpayers affected, compliance costs, revenue implications and possible unintended consequences.
• Monetary threshold for departmental appeals raised to Rs 60 lakh before the Income Tax Appellate Tribunal (ITAT).
• Threshold for departmental appeals before high courts raised to Rs 2 crore, and before the Supreme Court to Rs 5 crore.
• GST 2.0 has so far focused on rate rationalisation; process reforms were deferred to the next GST Council meeting scheduled for October 7.
• Sitharaman clarified there is no GST 3.0 as of now, as the government is still working on GST 2.0.
• On cryptocurrency, the government has chosen to wait for greater stakeholder clarity while continuing to tax transactions at source.
• On the space sector, she said commercial operations are 'fair play for tax' while R&D activities could get a more lenient approach.

Timeline

1. Wednesday (report dated September 16)Sitharaman addresses ITRAF's 8th International Tax Conference in Bengaluru, asks industry to name provisions for removal and outlines litigation-reduction measures.
2. October 7 (first week of October)Next GST Council meeting scheduled, where the deferred GST process reform agenda is to be discussed.

Who has a stake

• Finance Minister Nirmala Sitharaman / Ministry of Finance — Driving a tax reform agenda focused on reducing litigation, easing voluntary compliance and limiting enforcement to genuine cases.
• Tax professionals and industry bodies — Asked to shift from sector-specific demands for rate cuts and exemptions to evidence-based proposals, including surrendering provisions that benefit them.
• GST Council — Will take up the deferred process reform agenda of GST 2.0 at its October 7 meeting after rate rationalisation.
• ITAT, high courts and the Supreme Court — Higher monetary appeal thresholds (Rs 60 lakh / Rs 2 crore / Rs 5 crore) are meant to cut the volume of departmental tax appeals before them.
• Digital economy players — crypto, cloud computing firms — Face unresolved questions on taxation; crypto transactions continue to be taxed at source pending greater clarity.
• Space sector companies — Commercial operations liable to tax, while R&D activities may get leniency.
• ITRAF (International Tax Research and Analysis Foundation) — Host of the conference; urged, along with other institutions, to contribute to policymaking via independent research.

Why it matters

Tax litigation and compliance complexity are long-standing drags on India's business environment, and the Minister's ask signals a shift from bargaining over rates to pruning the statute book itself. Higher appeal thresholds and the promised GST process reforms would directly affect how many disputes reach tribunals and courts. The unanswered questions on crypto, cloud and space taxation show where India's next tax design battles lie.