The Income Tax Settlement Commission (ITSC) was a quasi-judicial body in India that offered taxpayers a one-time opportunity to resolve complex income tax disputes by making a full and honest disclosure of undisclosed income. The commission aimed to ease litigation and provide a faster resolution process compared to traditional assessments or appeals.
Under this mechanism, taxpayers who had filed their returns but were under scrutiny could approach the commission voluntarily, declaring any additional income not previously reported. In return, the commission could grant immunity from penalties and prosecution, provided the disclosure was truthful and complete. This encouraged voluntary compliance and helped reduce the burden on courts and tax departments.
The ITSC was particularly useful for small business owners, startups, and companies facing prolonged tax disputes. By opting for settlement, they could avoid costly and time-consuming legal proceedings and instead reach a fair conclusion through negotiation.
However, it's important to note that the Income Tax Settlement Commission has been abolished as of February 1, 2021, under the Finance Act, 2021. It has been replaced by the Interim Board for Settlement, which now handles pending cases.
For businesses and individuals looking to stay compliant with current income tax regulations and avoid disputes altogether, working with professional tax advisors is essential. You can explore tailored solutions for income tax planning and compliance at FinTax24's Income Tax Services.
In summary, while the ITSC no longer accepts new applications, its historical role was significant in promoting voluntary tax compliance and faster dispute resolution in India.