Constitution of Interim Boards for Settlement under the section 245AA of the Income tax act, 1961

## Report on the Establishment of Interim Boards for Settlement under the Income-tax Act, 1961 **1. Executive Summary:** This report analyzes a notification from the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes (CBDT), establishing seven Interim Boards for Settlement across India. This new policy, effective August 10, 2021, aims to facilitate the settlement of income tax disputes. The key finding is the formal creation of these boards, each with a designated headquarters, as per Section 245AA of the Income-tax Act, 1961. **2. Introduction:** The purpose of this report is to provide a comprehensive overview of the notification (S.O. 3216 (E)) issued by the CBDT on August 10, 2021, regarding the establishment of Interim Boards for Settlement. This report is based solely on the content of the provided policy text. **3. Policy Overview:** This is a *new* policy establishing Interim Boards for Settlement. * **Core Objective(s):** Based on the provided text, the core objective is to *establish* Interim Boards for Settlement, as mandated by Section 245AA of the Income-tax Act, 1961. The notification explicitly states that the boards are established "In pursuance of the powers conferred by subsection 1 of section 245AA of the Income-tax Act, 1961." **4. Background and Rationale:** As a new policy, the text implies a need for structured mechanisms for settling income tax disputes. The establishment of Interim Boards for Settlement suggests an intention to improve or expedite the resolution process related to income tax matters, possibly to reduce the burden on existing judicial or administrative channels. The reference to Section 245AA indicates a statutory basis for these boards. **5. Key Provisions / Changes:** This is a new policy, so the focus is on the entire text. The policy establishes seven Interim Boards for Settlement, specifically: * **Interim Board for Settlement I:** Headquarters in Delhi * **Interim Board for Settlement II:** Headquarters in Delhi * **Interim Board for Settlement III:** Headquarters in Delhi * **Interim Board for Settlement IV:** Headquarters in Kolkata * **Interim Board for Settlement V:** Headquarters in Mumbai * **Interim Board for Settlement VI:** Headquarters in Mumbai * **Interim Board for Settlement VII:** Headquarters in Chennai The notification also cites the relevant legal authority: subsection 1 of section 245AA of the Income-tax Act, 1961 (43 of 1961). The gazette number is S.O. 3216(E). **6. Target Audience and Stakeholders:** The direct target audience and stakeholders include: * Taxpayers involved in income tax disputes seeking settlement. * The Interim Boards for Settlement themselves. * The CBDT and other relevant departments within the Ministry of Finance. * Legal professionals specializing in tax law. **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** The Central Board of Direct Taxes (CBDT) under the Department of Revenue, Ministry of Finance, is the responsible agency. The Interim Boards for Settlement are the bodies responsible for handling settlement cases. * **Timelines or Procedures:** The text doesn't specify timelines or procedures. These details are likely to be outlined in separate guidelines or regulations related to Section 245AA of the Income-tax Act, 1961. * It can be inferred the Boards will have to be setup and staffed. **8. Expected Outcomes / Impact of Changes:** The likely intended outcomes based on the policy's stated provisions are: * A more structured and accessible process for income tax dispute settlement. * Potentially faster resolution of disputes compared to traditional litigation. * Reduced burden on existing judicial or administrative channels. * Increased efficiency in tax administration. **9. Conclusion:** The establishment of seven Interim Boards for Settlement represents a significant step towards improving the resolution of income tax disputes in India. This policy aims to provide a formal framework for settlement, potentially leading to a more efficient and accessible system for taxpayers and the tax administration. Further details regarding the operational procedures and specific powers of these boards would provide a more complete understanding of their impact.

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