Vivad se Vishwas: Less Time & High Hopes of Disputed Taxpayers

On March 4, the Vivad se Vishwas Bill which aims to settle more than 4.83 lakh pending direct tax disputes in the country was passed by the Lok Sabha with certain amendments.

Crux of the Matter

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.

Key Details
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.

CBDT’s Clarifications
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.

Curiopedia

The Central Board of Direct Taxes (CBDT) is a part of the Department of Revenue in the Ministry of Finance. It provides inputs for policy and planning of direct taxes in India and is also responsible for the administration of direct tax laws through the IT Department. It is a statutory authority functioning under the Central Board of Revenue Act, 1963. The Chairman and members of the CBDT are selected from the Indian Revenue Service (IRS) and are responsible for exercising supervisory control over specialized functional categories at field offices of the IT Department. More Info

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