Dispute Resolution Panel (DRP)
The Dispute Resolution Panel (DRP) is a fast-track dispute resolution mechanism under Indian tax law designed to handle certain high-value and international tax cases without requiring the taxpayer to go through the traditional appellate process.
It is constituted under Section 144C of the Income Tax Act, 1961.
Who Can Approach DRP
The DRP is available to:
- Foreign companies, and
- Taxpayers involved in transfer pricing adjustments
These taxpayers are referred to as eligible assessees.
How the DRP Process Works
- The Assessing Officer (AO) issues a draft assessment order
- The taxpayer can file objections before the DRP within 30 days
- The DRP reviews the case and issues directions
- The AO passes the final assessment order based on DRP directions
Key Features
- Panel of three Commissioners of Income Tax
- Time-bound resolution process
- No need to file an appeal before the Commissioner (Appeals)
- Binding directions on the Assessing Officer
Why It Matters
- Faster resolution for complex and high-stake tax disputes
- Commonly used in transfer pricing cases
- Reduces prolonged litigation
- Provides a structured mechanism for foreign entities
Important Note
Once a taxpayer opts for DRP, they cannot go to the Commissioner (Appeals) for that matter. However, they can appeal against the final order to the Income Tax Appellate Tribunal (ITAT).
