The revenue department is considering the setting up of a ruling authority like the Advance Pricing Agreement (APA) or Dispute Resolution Panel (DRP) to ascertain tax liabilities and settle tax disputes. This will allow the Income-Tax Department and taxpayers to sit together and resolve disputes, and agree on the tax to be paid.

The direct tax claims locked in litigation are about Rs 5 trillion. The concept is part of the minutes of the meeting circulated internally last month, when the revenue department discussed measures and the road map in line with its vision 2047.

Business Standard has reviewed the minutes, which are being prepared following the annual conference attended by officials of the finance ministry and Central Board of Direct Taxes, and senior revenue officers.

At present, APA deals with transfer-pricing cases that determine tax liabilities in advance to avoid any dispute. The DRP is an alternative mechanism that deals mainly with international taxation cases.

Experts say various Authorities for Advance Ruling (AARs) take up issues from a technical standpoint and do not cover wider matters of income tax. Also AAR decisions have not helped in containing litigation because most of the matters go for appeal.

“Such a process of optional and non-binding mediation can be helpful in eliminating tax disputes, particularly those relating to transfer pricing and other matters as well,” said Akhilesh Ranjan, advisor on tax policy at PwC and former member of the CBDT.

Among other measures, the department is looking to tax the corporate sector in agriculture, phase out exemptions, and tap new and emerging sectors like crypto assets, to increase the tax-GDP ratio to 15-20 per cent.