The increasing focus of national governments around the world on multinationals and their tax relationships is likely to lead to higher domestic tax disputes and, in a number of cases, international arbitration. The idea that at least one of the parties is a sovereign country in most foreign tax disputes gives the dispute resolution process special and highly nuanced features in the tax field. Tax dispute resolution has traditionally been a key area of focus for India's overall tax operation. This occurs because of a variety of factors, including ambitious taxpayers, a hostile regulatory atmosphere, as well as delays, and lengthy dependence on the dispute resolution system. The typical process of litigation in India (hierarchy wise) is shown below: Commissioner for Tax (Appeals), Income Tax Court of Appeals, High Court, and Supreme Court. As an alternative to the Commissioner (Appeals), some taxpayers (foreign companies or taxpayers in whose case price adjustments are made for transfer) have the option of approaching the 'Dispute Resolution Panel,' which is a college of three income tax commissioners. The conflict resolution route of the Panel offers some primary benefits, which would include the taxpayer's challenges to the proposed draft evaluation of the Assessing Officer being determined in a time-bound manner (nine months from the end of each month from the order date of the Assessing Officer). The Settlement Commission is an additional conflict resolution body that resolves conflicts relating to income tax. When implementing the Settlement Commission, taxpayers may disclose, before the tax office or even in the tax return, additional revenue in excess of what is already made public. The reasonably available immune system from the penalty and court proceedings is a massive advantage of the Settlement Commission route, despite certain key constraints. Typically, it has been determined that the route of the Settlement Commission appeals to taxpayers who have initiated searches, as well as to tax-paying citizens who have received contractual services. The tax office shall not be entitled to appeal to the Income Tax Appellate Tribunal against such an assessment which has been concluded on the basis of the order of the Dispute Resolution Panel, i.e. points which are decided on the taxpayer's behalf. Before the Dispute Settlement Panel agrees on the issue, the tax claim will not bear fruit. In recent years, the Government has taken a number of measures to reduce the use of litigation involving circulars published by the Central Board of Direct Taxes (CBDT) clarifying its tax position on many contentious issues; circulars published at an early stage on topics such as the General Anti-Avoidance Law (GAAR) in the context of 'frequently asked questions' to clarify tax consequences. While the process of the mutual agreement refers to the real need for effective enforcement of tax treaties and laws, whether in the context of international tax disputes or Indian tax disputes, the role assigned to the resolution process is similar to that of settlement in that there is no requirement for a decision to be taken and that it has a rather preliminary structure. The parties may refer the dispute to the national courts or, out of desperation, waive their claims if the process for mutual agreement fails. The procedure for a mutual agreement could be complemented by arbitration.

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