Vivad se Vishwas Scheme: All You Need to Know [Read Bill]

CBDT - Vivad se Vishwas Scheme - Budget 2020 - Budget Speech - Finance Minister - Nirmala Sitharaman - Taxscan

The Vivad se Vishwas scheme was announced by Union Finance Minister Nirmala Sitharaman during her budget speech on February 1, 2020. Given below is all the aspects you have to know about this amnesty scheme:

What?

Under this scheme, taxpayers whose tax demands are locked in dispute in multiple forums, can pay due to taxes by March 31, 2020, and get a complete waiver of interest and penalty. If a taxpayer is not able to pay within the deadline, he gets a further time till June 30, but in that case, he would have to pay 10% more on the tax.

The Vivad se Vishwas scheme is similar to the ‘Indirect Tax, Sabka Vishwas’ scheme, which was introduced by Finance Minister during her maiden budget presentation in July 2019. The Sabka Vishwas” legacy dispute resolution scheme was aimed at reducing disputes related to excise and service tax payments.

Who?

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.

How much?

In case it is just the interest and the penalty which is in dispute, the taxpayer will have to pay 25% of the disputed amount till March 31, and subsequently, it will be 30%. If a taxpayer is not able to pay within the March 31 deadline, he gets a further time till June 30, but in that case, he would have to pay 10% more on the tax. In case it is just the interest and the penalty which is in dispute, the taxpayer will have to pay 25% of the disputed amount till March 31, and subsequently, it will be 30%.

Why?

The Vivad se Vishwas Scheme aims to resolve 483,000 direct tax-related disputes pending in various appellate forums.

Central Board of Direct Taxes (CBDT) Chairman P C Mody on Tuesday said the direct tax dispute resolution scheme offers a fair deal to settle pending tax disputes as he urged people to come forward and avail the plan. Currently, there are 4.83 lakh direct tax cases pending in various appellate forums — Commissioner (Appeals), Income Tax Appellate Tribunal (ITAT), High Court and Supreme Court.

Central Board of Direct Taxes (CBDT) Chairman P C Mody while speaking at an Assocham (Associated Chambers of Commerce of India) post-budget interaction said, “I feel this is a fair deal and I would urge people to rethink about the pending issues and come forward and avail of the scheme.”

Key Points

  • The Direct Tax Vivad se Vishwas Bill, 2020 was introduced in Lok Sabha by the Minister of Finance, Ms. Nirmala Sitharaman, on February 5, 2020.  The Bill provides a mechanism for resolution of pending tax disputes related to income tax and corporation tax.
  • Appellant:  The Bill defines an appellant as the income tax authority, or the person, or both, whose appeal is pending before any appellate forum as on January 31, 2020.  These appellate forums are the Supreme Court, the High Courts, the Income Tax Appellate Tribunals, and the Commissioner (Appeals).
  • Resolution mechanism:   The Bill proposes a resolution mechanism under which an appellant can file a declaration to the designated authority to initiate resolution of pending direct tax disputes.   The last date to file such declaration will be notified by the central government.  Based on the declaration, the designated authority will determine the amount payable by the appellant against the dispute and grant a certificate, containing particulars of the amount payable, within 15 days of the receipt of the declaration.  The appellant must pay this amount within 15 days of the receipt of the certificate and inform the designated authority of such payment.  Such amount will not be refundable.
  • Once the designated authority issues the certificate, appeals pending before the Income Tax Appellate Tribunals and the Commissioner (Appeals) will be deemed to be withdrawn.  In case of appeals or petitions pending before the Supreme Court and High Courts, the appellant is required to withdraw the appeal or petition.
  • The Principal Chief Commissioner will designate an officer, not below the rank of a Commissioner of Income Tax, as the designated authority to manage the proposed resolution mechanism.
  • Amount payable for resolution:  The amount payable by the appellant for resolution of disputes is determined based on whether the dispute relates to payment of tax, or payment of interest, penalty, or fee.  Further, he is required to pay an additional amount if such payment is made after March 31, 2020.  Table 1 shows the amount payable by the appellant for dispute resolution.

Table 1:  Amount payable for resolution of disputes

Disputes relating toPayable before March 31, 2020Additional amount payable after March 31, 2020
Payment of taxAmount of disputed tax

(any interest or penalty associated with such tax will be waived)

(i) 10% of the amount of disputed tax, or (ii) interest and penalty relating to that tax, whichever is lower
Payment of fee, interest, or penalty25% of the amount under such disputeAnother 5% of the amount under such dispute
  • Waiver of rights:  For dispute resolution, the appellant is required to furnish an undertaking waiving his rights to seek any remedy or claim in relation to that dispute under any law, including the Income Tax Act, 1961 (IT Act).  All such claims already filed in relation to the dispute must be withdrawn before filing the declaration.
  • Immunity to appellant:  Once a dispute is resolved, the designated authority cannot levy interest or penalty in relation to that dispute.  Further, no appellate forum can make a decision in relation to the matter of dispute once it is resolved.  Such matters cannot be reopened in any proceeding under any law, including the IT Act.
  • Revival of disputes:  The declaration filed by an appellant will become invalid if: (i) its particulars are found to be false, (ii) he violates any of the conditions referred to in the IT Act, or (iii) he seeks any remedy or claim in relation to that dispute.  Consequently, all proceedings and claims withdrawn based on the declaration will be deemed to have been revived.
  • Disputes not covered:  The proposed mechanism will not cover certain disputes.  These include disputes: (i) where prosecution has been initiated before the declaration is filed, (ii) which involve persons who have been convicted or are being prosecuted for offences under certain laws (such as the Indian Penal Code), or for enforcement of civil liabilities, and (iii) involving undisclosed foreign income or assets

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