Banish retrospective tax amendments: Former CJI DY Chandrachud bats for tax overhaul

Former Chief Justice of India (CJI) DY Chandrachud on Friday called for a permanent end to retrospective tax amendments and a comprehensive overhaul of India’s legal and regulatory infrastructure to support the country’s ambition of becoming a $10 trillion economy

Delivering the keynote address at the centenary celebrations of the Chamber of Tax Consultants in Mumbai, Justice Chandrachud said that unpredictable tax laws will discourage investments and be a roadblock to the country's economic goals.

“The destabilizing ghosts of retrospective tax amendment must be permanently banished,” he said.

Clarity, simplicity and fairness in tax law are central to economic growth and public trust, he emphasised.

“The health of India's economy is intrinsically linked to a tax regime which is perceived by taxpayers and investors as fair, transparent, predictable and efficient. A regime viewed as capricious or excessively adversarial undermines its own revenue goals by discouraging compliance and investment,” he said.

On Income Tax Bill of 2025 currently under review by a Parliamentary Select Committee, Justice Chandrachud said that it marks a significant improvement over the 1961 Income Tax Act.

“The old Income Tax Act had 819 sections divided into 47 chapters, including alphanumerical sections like 115JB. The new bill reduces this to 536 sections and just 23 chapters, while eliminating 1,200 provisos. The word count is nearly half. How many trees have been cut in devoting paper to understanding whether a proviso to a section Is an exception or an explanation, The word count of the new bill is nearly half of the old act,” he said.

However, he cautioned that simplification must be meaningful.

“New tax laws should not create new ambiguities that can lead to protracted litigation,” he warned.

Referring to the recent overhaul of criminal laws, he said that “while new enactments retain the skeletal framework and core principles of their predecessors, they should not be mere replicas.

"New laws must represent a conscious evolution of thought to address the realities of the 21st century and of emerging India,” he opined.

The former CJI also highlighted the importance of technology in the delivery of professional services and judicial efficiency.

“For Digital India to succeed, we must deliver professional services quickly and effectively through digital means," he underscored.

In this regard, he highlighted the use of video conference platforms for court hearings during the COVID-19 pandemic.

“The adoption of virtual hearings yielded savings of over ₹1,200 crores annually. Imagine the good that can be achieved towards reducing litigation. That money could be used for judicial infrastructure, legal aid, and training,” he stated.

Justice Chandrachud said that a backlog of unresolved fiscal disputes hampers economic activity by causing delays, stalling investments, affecting businesses, eroding public trust, and holding back growth.

Therefore, he called for the expansion of online dispute resolution (ODR) mechanisms to resolve small tax disputes efficiently.

“ODR must be used for low-value tax claims. Today, all these travel right up to the Supreme Court, and I have dealt with all of them in the midst of dealing with some of the most seminal constitutional issues. Taking these small disputes out of the legal system would free up our tribunals and courts to focus on the big, complex cases.”

He also warned about the rising challenge of digital fraud and deepfake technologies.

“I was shocked to discover that an industrialist had been duped into paying crores of rupees by a scammer pretending to be me over a video call. My name was used to rob someone and disrupt their peace,” he lamented.

He also batted for the establishment of specialized commercial courts with expertise in finance, trade, competition law, and emerging technologies.

“These courts should resolve cases quickly, ideally within 180 days. We also need world-class arbitration and mediation centers matching international standards. This will help us resolve complex international business disputes efficiently and earn global respect,” he stated.

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