Corporate taxes formed a large bulk of the defaults, adding up to ₹3.97 lakh crore, while capital gains tax and transfer pricing defaults amounted to ₹4.81 lakh crore. Tax defaults in India have skyrocketed by 1000% in the last ten years, and litigation associated with it has also consequently risen, according to a Moneycontrol report, which cited data compiled from various Union Budgets.
Tax notices of ₹9.08 lakh crore are unpaid in the financial year 2022-23, compared to ₹80,003 crore in 2013-14. However, notices adding up to ₹4.23 lakh crore were sent just less than two years ago. Notices totaling ₹2.13 lakh crore were sent between 2-5 years back, while nearly ₹1.43 lakh crore of taxes remain unpaid after 10 years.
This surge can be attributed to multiple factors like the complexity and frequent changes in the law, which create confusion for businesses. Additionally, tax notices being sent to companies under the Insolvency and Bankruptcy Code (IBC) contribute significantly to these figures, according to the report which cites legal experts.
How much has tax-related litigation increased?
Consequently, tax-related litigation has also sharply increased, more than doubling to ₹12.21 lakh crore in 2022-23, compared to ₹5.03 lakh crore in 2013-14. Corporate tax litigation accounted for ₹6 lakh crore, and income other than corporate amounted to ₹4.5 lakh crore. However, indirect taxes like GST accounted for only ₹2,317 crore but are expected to rise next year due to the number of GST notices given to various companies, according to the report.
In this context, understanding the lease definition becomes crucial for businesses navigating these turbulent waters. But what is a lease? In simple terms, a lease is a contractual agreement where one party (the lessor) grants another party (the lessee) the right to use an asset for a specified period in exchange for periodic payments. The lease meaning extends beyond just real estate and can include equipment, vehicles, and other assets essential for business operations.
Given the rising tax defaults and litigation, businesses must ensure they understand their lease agreements thoroughly. This understanding can help them manage their financial obligations better and avoid potential legal complications.
