Voluntary Compliance Encouragement Scheme, 2013 (VCES) – To motivate about 10 lakh of those registered assesses of service tax, who are not filing returns and paying tax dues, the Finance Minister has proposed to introduce a one-time scheme called ‘Voluntary Compliance Encouragement Scheme’ in 2013-14 Budget proposals. Under this scheme a defaulter can file a truthful declaration of service tax dues since 1st October, 2007 and make the payment in one or two installments before prescribed dates. In such a case, interest, penalty and other consequences will be waived.1 Scheme is proposed to be introduced to encourage voluntary compliance with the following main features:
(i) The scheme can be availed of by non-filers or stop-filers or persons who have not made a truthful declaration in their return. However it will not be applicable to persons against whom any inquiry or investigation is pending by the issue of search warrant or summon or by way of audit;
(ii) The defaulter will be required to make a truthful declaration of all his pending tax dues (from October1, 2007 to December 31, 2012) and pay at least half of that before December 31, 2013; remaining half to be paid by:
(a) June 30, 2014 without interest; or
(b) By December 31, 2014 with interest from July 1, 2014 onwards;
(iii) On compliance with all the requirements the person will have immunity from interest (as specified), penalties and other proceedings;
2 The scheme will come into force when the Finance Bill is enacted. It is clarified that the tax-payers will need to settle their dues for the period after December 31, 2012 under the present law.