After the announcement of the bill in the Union Budget 2020 and the approval of the Union Cabinet on February 12, it was tabled in the Lok Sabha on March 2 by the Finance Minister.
This bill is expected to resolve nearly 4.83 lakh direct tax cases amounting to 9.32 lakh crores which are currently pending in the various forums including India’s Income Tax Appellate Tribunal (ITAT), Commissioner (Appeals), Debt Recovery Tribunals, High Courts and the Supreme Court.
The taxpayers willing to settle their tax disputes will be allowed a complete waiver on interest and penalty, provided they pay the entire disputed amount by March 31, 2020. After March 31, the taxpayers will have to pay 10% additional disputed tax over and above the existing tax liability. The scheme will remain open till June 30, 2020.
In case of arrears related to disputed interest or penalty, only 25% of the disputed penalty or interest will have to be paid if the payment is done by March 31, 2020. Once the bill becomes an act, it can be available in the tax recoveries amounting to Rs.5 crores.
However, disputes relating to wealth tax, securities transaction tax (STT), commodity transaction tax (CTT) and the tax on online advertisements are not covered under this bill.
The Central Board of Direct Taxes (CBDT) issued clarifications related to this bill which says that picking and choosing issues for settlement of an appeal is not allowed. CBDT clarified that this scheme would cover Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) disputes and will not cover disputes pending before the Authority of Advance Ruling (AAR) unless it is challenged in a High Court.
If the revenue department has gone for appeal, the assessee will have to pay only 50% of the disputed tax; whereas in case of department-appealed dispute related to penalty, interest or fee, then only 12.5% of the disputed amount needs to be paid if payment is made by 31 March 202.
According to many experts, time available to the disputed parties to opt for the scheme and make payments before 31 March to avail maximum benefits seems very less.