The Union Finance Minister Ms. Nirmala Sitharaman during her budget speech delivered on February 1, 2020, announced the launch of an amnesty scheme named ‘Vivad Se Vishwas– A Dispute Resolution Scheme 2020′. This scheme proposed by the Finance Minister of India aims to reduce the number of ongoing legal disputes in the domain of direct taxation. The proposed scheme offers a once in a lifetime opportunity to settle the unresolved issues pertaining to the Direct Tax regime in a simple and speedy manner.
Under the scheme, those taxpayers whose tax demands are caught up in disputes in various forums, can pay due taxes by March 31, 2020, and get a complete waiver of any interest or penalty. Although the scheme is open till June 30, 2020, however, some penalty may be charged if you fail to avail of the scheme before March 31, 2020.
The Finance Minister,
in her budget speech, said that:
Currently there are 4,83,000 direct tax cases pending in various appellate forums, i.e. CIT, ITAT, High Court and Apex Court. Sabka Vikas Scheme introduced in indirect tax in the last budget has resulted into the settlement of 1,89,000 Cases.”
“This year, I propose to bring a scheme similar to the indirect tax Sabka Vikas for reducing litigation even in the direct tax.”
Key Objective of
Vivad Se Vishwas Scheme
The core objective of
the scheme launched by the FM is to provide a mechanism for resolution of
pending tax disputes related to income tax and corporation tax. The proposed
scheme aims to resolve 4,83,000 direct tax-related disputes pending in several
appellate forums, namely, Commissioner (Appeals), Income Tax Appellate Tribunal
(ITAT), High Court and Supreme Court. The scheme is expected to settle a
significant number of these cases.
government has been witnessing a big shortfall in revenues, especially tax
revenues. The Direct Tax collections of CBDT have been lower than the budget
targets set by the government. Therefore, the proposed scheme of resolving
pending tax disputes also aims at addressing the revenue shortfall and hence
increases the revenues of the government.
Mechanism of Vivad
Se Vishwas Scheme
- The Direct Tax ‘Vivad Se Vishwas Bill’, 2020 proposes a mechanism under which an appellant ( income-tax authority or the person or both whose appeal is pending before any appellate forum) can file a declaration to the designated authority to begin the resolution of pending direct tax disputes.
- The last date to file this declaration shall be notified by the Central government.
- Based on the declaration filed by the appellant the designated authority will determine the amount to be paid by the appellant against the dispute and will grant a certificate containing particulars of the amount payable within 15 days of the receipt of the declaration.
- The appellant will have to pay the determined amount within 15 days of the receipt of the certificate and inform the designated authority of payment made.
- Now, when the designated authority issues the certificate all the appeals which were pending before the Income-tax Appellate Tribunals and the Commissioner (Appeals) shall be deemed to be withdrawn. And, the appeals or petitions pending before the Supreme Court and High Courts, the appellant will have to withdraw the appeal or petition.
- The amount to be paid by the appellant for resolution is based on whether the dispute relates to the payment of tax, or payment of interest, penalty, or fee.
Note: The proposed mechanism shall not cover the disputes where the prosecution has been initiated even before the declaration is filed. Apart from this, the disputes which involve persons being prosecuted for offenses under certain laws won’t be covered under the proposed mechanism.
Immunity to Appellant:
Once a dispute is resolved, the designated authority cannot levy interest or
penalty in relation to that dispute.
Benefits of Vivad
Se Vishwas Scheme
Following are some of the benefits of the proposed scheme:
- The scheme offers relief from payment of interest and penalty.
- The person that will be discharged under the scheme shall not be liable for prosecution.
- The proposed scheme will be able to generate revenues for the government.
- ‘Vivad Se Vishwas’ scheme will clean the old baggage of cases in various High Courts and the Supreme Court of India.