Vivad Se Vishwas Bill- 17 Key Points

Points to be considered related to Vivad Se Vishwas Bill

1. Aim:

To provide resolution of disputed tax and for matters connected therewith or incidental thereto.

2. Who can file an declaration under Vivad Se Vishwas Scheme:

Appellant will be any person or Income tax authority or both who has filed an appeal before appellate forum.

Appellate forum= S.C, H.C, ITAT and CIT (A).

3. What appeals can be opted for Vivad Se Vishwas Scheme:

Appeal pending before the appellate forum as on 31^st January 2020 can only be opted for resolution under this scheme.

4. When to file an declaration:

Declaration must be filed till 31^st March, 2020. Further extension is available till 30^th June 2020 on payment of certain amount.

5. Benefit under Vivad Se Vishwas Scheme:

This scheme provides for waiver of interest, immunity from initiation of penalty proceedings & proceedings in respect of an offence [i.e. prosecution institution] where the declaration provided under the Scheme [u/s.4] is filed by the declarant before the designated authority. {Section-6}

No benefit, concessions or immunity will be granted to any matters which are not in relation with the declaration made. {Section-8}

6. Amount Payable by the declarant under Vivad Se Vishwas Scheme:

S. No.	Nature of tax arrear	Amount payable on or before 31.03.2020	Amount payable on or after 01.04.2020 but before 30.06.2020
a)	Where the tax arrear is the aggregate amount of disputed tax, interest chargeable or charged on such disputed tax and penalty leviable or levied on such disputed tax.	Amount of the disputed tax	The aggregate of the amount of disputed tax and ten percent of disputed tax. Provided that where the ten percent of disputed tax exceeds the aggregate amount of interest chargeable or charged on such disputed tax and penalty leviable or levied on such disputed tax, the excess shall be ignored for the purpose of computation of amount payable under this act.
b)	Where the tax arrear relates to disputed interest or disputed penalty or disputed fee.	Twenty five percent of disputed interest or disputed penalty or disputed fee.	Thirty percent of disputed interest or disputed penalty or disputed fee.

7. Appeal Pending before CIT (A) and ITAT- deemed withdrawn:

Once the application is filed, the appeals pending before the CIT (A) and ITAT shall be deemed to have been withdrawn. {Section-4(2)}

8. Withdraw the writ petition or SLP filed:

Before filing of application, the appeal pending before the H.C or S.C should be withdrawn and the proof of withdrawal of appeal is to be submitted along with the declaration. {Section-4(3)}

9. Withdraw the arbitration/mediation proceedings:

Before filing of application, the proceedings initiated for arbitration, mediation or conciliation should be withdrawn and the proof of withdrawal of appeal is to be submitted along with the declaration. {Section-4(4)}

10. Undertaking in respect of waiving the rights:

The declarant must furnish an undertaking in respect of waiving the rights, direct or indirect to seek or pursue any remedy or any claim in relation to the tax arrears. {Section-4(5)}

11. Application will be considered as void, if:

• Material particulars furnished are found to be false.
• When any of the conditions referred under this act is violated.
• When declarant not acts in accordance with the undertaking submitted by him.

Application once treated as void, the proceedings and claims which were withdrawn u/s 4 and all the consequences under the IT Act against the declarant shall be deemed to have been reviewed. {Section-4(6)}

12. Process to be followed:

Declarant to file declaration to the designated authority along with the amount payable {Section-4(6)}

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Designated Authority shall pass order within 15 days from the receipt of declaration determining amount payable by the declarant and grant certificate containing particulars of tax arrears and amount payable.

{Section-5(1)}

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Declarant shall pay the amount determined in order within 15 days from receipt of certificate and intimate the details of payment to designated authority. {Section-5(2)}

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Then, the designated authority shall pass an order stating that the declarant has paid the amount.

13. Order passed will be conclusive:

Every order passed under this scheme shall be conclusive as to the matters stated in order and no matter covered by such order shall be reopened in any other proceedings under Income Tax Act or under any other law.

{Section-5(3)}

No appellate forum or arbitrator shall proceed to decide any issue relating to tax arrear mentioned in the declaration in respect of which the order has been made.

{Section-4(7)}

14. No Refund will be granted:

Any amount paid under this scheme shall not be refunded under any circumstances. {Section-7}

15. Who cannot enjoy the benefit of scheme?

          The following person shall not be eligible to opt for the scheme–

a) In respect of tax arrears-

• • Against whom search has been conducted and assessment has been framed under section 153A or 153C of the Act.
  • Against whom prosecution has been instituted.
  • Person having undisclosed income from a source located outside India or undisclosed asset located outside India.
  • Against whom the assessment has been framed as per section 90/90A based on the information available from tax treaties across the countries.
  • Against an order of CIT(A) who have enhanced the original tax liability before 31.01.2020.

b) Against any person in respect of whom an order of detention has been made under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 subject to some conditions.

c) Against any person in respect of whom prosecution for any offence punishable under the provisions of the Indian Penal Code, the Unlawful Activities (Prevention) Act, 1967, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Prevention of Corruption Act, 1988, the Prevention of Money Laundering Act, 2002, the Prohibition of Benami Property Transactions Act, 1988 or for the purpose of enforcement of any civil liability has been instituted or such person has been convicted of any such offence punishable under any of those Acts.

d) Against any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992.

{Section-9}

16. Calculation of Disputed Tax:

(i) Tax determined under the Income-tax Act, 1961 in accordance with the following formula— (A – B) + (C – D) where,

A =	An amount of tax on the total income assessed as per the provisions of the Income-tax Act, 1961 other than the provisions contained in section 115JB or section 115JC of the Income-tax Act, 1961(herein after called general provisions).
B =	An amount of tax that would have been chargeable had the total income assessed as per the general provisions been reduced by the amount of income in respect of which appeal has been filed by the appellant.
C =	An amount of tax on the total income assessed as per the provisions contained in section 115JB or section 115JC of the Income-tax Act, 1961.
D =	an amount of tax that would have been chargeable had the total income assessed as per the provisions contained in section 115JB or section 115JC of the Income-tax Act, 1961 been reduced by the amount of income in respect of which appeal has been filed by the appellant

Provided that where the amount of income in respect of which appeal has been filed by the appellant is considered under the provisions contained in section 115JB or section 115JC of the Income-tax Act, 1961 and under general provisions, such amount shall not be reduced from total income assessed while determining the amount under item D.

Provided further that in a case where the provisions contained in section 115JB or section 115JC of the Income Tax Act, 1961 are not applicable, the item (C – D) in the formula shall be ignored.

Provided also that in a case where the amount of income, in respect of which appeal has been filed by the appellant, has the effect of reducing the loss declared in the return or converting that loss into income, the amount of disputed tax shall be determined in accordance with the formula specified in sub-clause (i) with the modification that the amount to be determined for item (A – B) in that formula shall be the amount of tax that would have been chargeable on the income in respect of which appeal has been filed by the appellant had such income been the total income.

(ii) Tax determined u/s 200A/201/201(6A)/206C/206CB of the IT Act in respect of which the appeal has been filed by the declarant.

17. Tax Arrear:

(i) The aggregate amount of disputed tax, interest chargeable or charged on such disputed tax, and penalty leviable or levied on such disputed tax, or

(ii) Disputed interest, or

(iii) Disputed penalty; or

(iv) Disputed fee, as determined under the provisions of the Income-tax Act; 6.

(Disclaimer: This write up is based on the understanding and interpretation of authors and the same is not intended to be a professional advice.)

[The author is a Practicing Chartered Accountant and can also be reached at shashank.vndg@gmail.com]