Settling Tax Disputes by Vivad Se Vishwas Scheme – 2020

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Settling Tax Disputes by Vivad Se Vishwas Scheme – 2020.

To reduce the pending income tax litigation & unlock the blocked revenue for the Government, Finance Minister Ms. Nirmala Sitharaman has announced a dispute resolution scheme titled “Vivad Se Vishwas- 2020”The scheme is now duly passed by both the House of Parliament & CBDT will soon notify the rules, forms as well as issue few more clarification for smooth implementation of scheme. It is certainly a welcome scheme for settling the pending litigations & disputes considering the facts that there are around 4,83,000 direct tax cases pending at  various appellate forums. Let us know about the key feature of the scheme:

  1. Eligibility for the Vivad se Vishwas Scheme:

Under the scheme, all taxpayers whose cases are pending at any appellate forum be it Commissioner (Appeals), Income Tax Appellate Tribunal (ITAT), High Court or supreme court can end the disputes by filing a declaration under the scheme & paying the taxes thereafter. Even following cases are also eligible to opt for the scheme:
1. Cases where time limit for filing appeal has not expired as on 31.01.2020
2. Case pending before Dispute Resolution Panel (DRP) as on 31.01.2020 as well as cases where DRP had issued directions on or before 31.01.2020 but no order has been passed
3. All Revision petitions U/s 264 pending before CIT as on 31.01.2020
4. Search cases where the disputed demand is less than Rs. 5 Crore. Limit of Rs. 5 crore will be computed on yearly basis. For example, if there are 7 assessments of an assessee relating to search & seizure, out of which in 5 assessments, disputed tax is not exceeding Rs. 5 Crore in each year and it exceeding Rs. 5 Cr in remaining 2 assessments then scheme can be opted for all or any one of the 5 assessments.

  1. Amount of Payment to be made under Vivad se Vishwas Scheme:
    The person opting for the scheme would get a waiver from interest and penalty. The amount payable would be different for appeals filed by the taxpayers vis a vis appeal filed by the Income Tax Department. The same is summarized as under:

A] Appeals filed by the assessee 

Particulars of Cases  If payment done up to  31.03.2020 If payment done  after 31.03.2020
i. All cases (Other than search cases) where dispute involves tax, interest, penalty, etc. 100% of the Disputed Tax. 110% of Disputed Tax.
ii. Search cases involving dispute relating to tax, interest, penalty, etc. 125% of the Disputed Tax. 135% of Disputed Tax.
iii. Where dispute relates to only interest, penalty or levy 25% of Disputed Interest, Penalty or Fee. 30% of Disputed Interest, Penalty or Fee.

 

B] Appeals filed by Department:

Particulars of Cases  If payment done up to  31.03.2020 If payment done  after 31.03.2020
i. All cases (Other than search cases) where dispute involves tax, interest, penalty, etc. 50% of the Disputed Tax. 55% of the Disputed Tax.
ii. Search cases involving dispute relating to tax, interest, penalty, etc. 62.50% of the Disputed Tax. 67.50% of the Disputed Tax.
iii. Where dispute relates to only interest, penalty or levy 12.50% of Disputed Interest, Penalty or Fee. 15% of Disputed Interest, Penalty or Fee.

 

  1. Who cannot opt for the Scheme:
  2. All search cases where disputed tax is more than Rs. 5 Cr in any year.
  3. Prosecution cases

iii.   Cases involving undisclosed foreign income/ assets

  1. Cases completed on the basis of information received from other countries
  2. Cases covered under certain laws like Benami law, PMLA, Narcotic Drugs and Psychotropic Substances Act, Special Courts Act, the Unlawful Activities (Prevention) Act, 1967, the Prevention of Corruption Act, the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 would continue to remain out of the scope of the scheme.

Time is too short to opt for the scheme (i.e., up to 31.03.2020) and so taxpayers have to act quickly now.  This is a one-time chance for various tax payers, especially in cases where there is a dilemma as to the outcome of the pending litigation involving high stake. By opting for the scheme, the taxpayers not only get the waiver from interest & penalty but also against subsequent prosecutions if the appeal is confirmed. The deadline for payment of tax without any extra payment of 10%, 5% or 2.50% as discussed above is 31.03.2020. Thought additional time frame up to 30.06.2020 is also provided but the cost of such delayed payment is much higher as compared to the normal interest rate of 1%.  It is advisable for the person opting for the scheme to make the payment before 31.03.2020. Further, taxpayers must note that “payment” is the main crux of the scheme. If taxpayers fail to make the payment, they will not have any remedy as withdrawals of appeal is one of the conditions for availing the benefit under the present scheme.

[Readers may forward their queries at nareshjakhotia@gmail.comOther articles & response to queries are available at www.theTAXtalk.com]

TheTaxTalk

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