e-DRS u/s 245MA of IT Act for Effective Tax Dispute Management

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e-DRS is managed by the Central Board of Direct Taxes and aims to reduce litigation and provide relief to eligible taxpayers under Section 245MA of the Income-tax Act, 1961.

The e-DRS enables the taxpayer, who fulfils certain specified conditions as stipulated in section 245MA of the Act, to file an application electronically for dispute resolution to the DRC designated for the region of Principal Chief Commissioner of Income-tax having jurisdiction over the taxpayer.

What is DRC?

Dispute Resolution Committees (DRC) is a committee constituted by the Central Government in accordance with provision of section 245 MA of the Income Tax Act.

DRCs have been set up in 18 regions across India, designated to handle applications for dispute resolution. Their contact details can be found on the Income Tax Department’s website.

Who is a “specified person” for e-DRS?

Specified person means a person who fulfils the conditions mentioned as per section 245MA(5) of Income Tax Act 1961 read with rule 44DAD of Income Tax Rules 1962 which are as under:

  • He is not a person in respect of whom an order of detention has been made under the conversation of Foreign Exchange and Prevention of Smuggling Activities Act 1974.
  • He is not a person in respect of whom prosecution has been instituted and has been convicted of any offence punishable under any of the following Acts:
  1. Indian Penal Code
  2. Unlawful Activities (Prevention) Act, 1967
  3. Prevention of Corruption Act, 1988
  4. Prevention of Money Laundering Act, 2002
  5. Prohibition of Benami Transaction Act, 1988
  6. Narcotic Drugs and Psychotropic Substance Act, 1985

Who is Eligibile for the Purpose of e-DRS application?

Disputed Order Limit

Aggregate sum of variations must not exceed Rs. 10 lakh.

Income Limit

Returned income for the assessment year should not exceed Rs. 50 lakh.

Excludes

Orders based on searches, surveys, or information under Sections 90/90A are not eligible.

Application Process

Application to be filed in Form No. 34BC electronically on the e-filing portal as per Rule 44DAB.

How to apply for e-DRS?

  • Log in to the Income Tax portal.
  • Click using PAN/TAN as user ID
  • Navigate to Dashboard -> e-File -> Income Tax Forms -> File Income Tax Forms -> Select Form 34BC -> Fill.
  • E-Verify using Aadhar OTP, EVC, or DSC.

Deadline to file e-DRS application

Within one month of receiving the specified order.

If an appeal is pending before the CIT (Appeals), the e-DRS application must be filed by on or before 30.09.2024.

For specified orders passed on or before 31.08.2024, application can also be filed by 30.09.2024.

DRC’s Role in Modifying Variations and Penalties

The DRC can modify variations and grant penalty/prosecution relief under Rule 44DAC.

It must pass its order within six months from the month the application is admitted.

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