The Honorable Finance Minister while rendering the Budget 2020 on 1st February 2020 made an important announcement of reducing the pending Direct Tax litigations matters substantially, by introducing ‘Vivad se Vishwas Scheme’. Accordingly, on 5th February 2020, “The Direct Tax Vivad se Vishwas Bill 2020” is introduced in the Lok Sabha. This scheme is similar to the ‘Indirect Tax, Sabka Vishwas’ scheme, which was introduced by Finance Minister during her maiden budget presentation in July 2019.
Objective :
To reduce the direct tax disputes and litigation by paying the disputed tax arrears with concession. The Vivad se Vishwas Scheme aims to resolve 483,000 direct tax-related disputes pending in various appellate forums.
Applicability :
Taxpayers whose tax demands are locked in dispute in multiple forums can pay due taxes and get a complete waiver of interest and penalty.
When :
March 31, 2020. Further extension available till June 30, 2020.
Amount Payable :
Note :
- ‘Disputed Tax’ is the tax on additions which have been contested in appeal
- ‘Disputed fee’ is the fee determined for which appeal is filed
- ‘Disputed Interest / Penalty’ is the interest or penalty as the case may chargeable or charged for which appeal is filed
- ‘Last date’ may be notified later although announced as 30th June, 2020 in the Budget Speech
Procedure :
- Declarant is required to file a declaration in prescribed form before the Designated Authority (not below the rank of CIT)
- Upon filing such declaration, relevant appeal shall be deemed to have been withdrawn, from the date of certificate issued by the Designated Authority u/s. 5(1).
- An undertaking in the prescribed form shall be furnished by the Declarant waiving his rights (direct or indirect) to seek or pursue any remedy or any claim in relation to tax arrears otherwise available under any law.
- Designated Authority within 15 days from date of receipt of declaration; by order, determine the amount payable by the declarant and grant a certificate.
- Declarant shall pay the amount determined within 15 days of receipt of such certificate and intimate the Designated Authority pursuant to which Designated Authority pass an order to that effect which will be conclusive.
- Consequent to such order being passed by Designated Authority, no proceedings of any offence, penalty or interest in respect of any tax arrears be instituted against the declarant.
- Any amount paid pursuance of such declaration shall not be refundable under any circumstances.
Exclusions :
The provisions of this Act shall not apply :
- in respect of tax arrear :
- relating to an assessment year in respect of which an assessment has
been made under section 153A or section 153C of the Income-tax Act, if it relates
to any tax arrear; - relating to an assessment year in respect of which prosecution has
been instituted on or before the date of filing of declaration; - relating to any undisclosed income from a source located outside
India or undisclosed asset located outside India; - relating to an assessment or reassessment made on the basis of
information received under an agreement referred to in section 90 or section 90A
of the Income-tax Act, if it relates to any tax arrear; - relating to an appeal before the Commissioner (Appeals) in respect of
which notice of enhancement under section 251 of the Income-tax Act has been
issued on or before the specified date;
- relating to an assessment year in respect of which an assessment has
- to any person in respect of whom an order of detention has been made under
the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling
Activities Act, 1974 on or before the filing of declaration. - to any person in respect of whom prosecution for any offence punishable
under the provisions of the Indian Penal Code, the Unlawful Activities (Prevention)
Act, 1967, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Prevention
of Corruption Act, 1988, the Prevention of Money Laundering Act, 2002, the Prohibition
of Benami Property Transactions Act, 1988 or for the purpose of enforcement of any
civil liability has been instituted on or before the filing of the declaration or such
person has been convicted of any such offence punishable under any of those Acts. - to any person notified under section 3 of the Special Court (Trial of Offences
Relating to Transactions in Securities) Act, 1992 on or before the filing of declaration.
Conclusion :
The pending litigations have been piled up over the years due to the fact the number of appeals filed by taxpayers as well as Government are much more than the number of appeals disposed. This will save time and cost of litigation for the taxpayers as well as the government.
Industry trackers said several companies had already started reaching out to their tax advisers and lawyers to check if they could take advantage of the scheme. This could also be a big draw for the multinationals that could resolve some legacy tax issues.
