CBDT has issued a Clarification on Direct Tax Dispute Resolution Scheme 2016 and clarified that scheme comes into force from 1st June, 2016, can be availed up to 31st December, 2016.

Riaz Thingna, Director, Grant Thornton Advisory Private Limited on the clarification said that  “The Government’s commitment to up the chart on the ease of doing business in India has seen another push by the introduction of the Direct tax Dispute Resolution scheme effective 1 June 2016. The intent was originally announced in the Finance Act 2016 and has now seen light of day by way of a notification. Assesses opting for the scheme will get a waiver from penalty, either in part or full based on the quantum of the demand involved, as well as immunity from prosecution. By opting for the scheme, assesses can resolve the impending litigation by paying only the tax and interest and avoid penalty and prosecution, besides gaining certainty on the closure  of the issues involved. The threshold prescribed  for availing of a full penalty and prosecution waiver on payment of tax and interest is upto 10 lakhs, being the disputed tax demand. Above 10 lakhs, 75 percent of the penalty waiver can be availed, besides complete immunity from prosecution. Details pertaining to the Scheme have been clarified by way of FAQ’s addressing various concerns raised by the stakeholders seeking clarity on the provisions of the scheme.

This is a welcome move, following the voluntary income declaration scheme, clearly indicating the Government’s intention to better the impression of  India within the Global investment community and to attract investment in the country.

While it will require a shift in mind set to adapt to the changing reforms, it is a step in the right direction and needs to be backed by the advocators of the profession to achieve the desired objectives.”

Text of The CBDT clarification is as follows:-

Press Information Bureau
Government of India
Ministry of Finance
Dated: 15-September-2016

Direct Tax Dispute Resolution Scheme, 2016 which has come into force from 1st June, 2016, can be availed up to 31st December, 2016.

Litigation is a scourge for a tax friendly regime. In order to reduce the pending litigation, the Direct Tax Dispute Resolution Scheme, 2016 (the Scheme) has come into force from 1st June, 2016 and can be availed up to 31st December, 2016. The Scheme is available to the cases pending with the first appellate authority [i.e. CIT (A)] as on 29th February, 2016, subject to certain conditions. It also extends to the cases pending litigation owing to retrospective amendment at different levels.

 Under the Scheme, if the amount of disputed tax is

· Up to Rs.10 lakh, complete waiver from levy of penalty and from initiation of prosecution is provided on payment of assessed tax along with the interest.

· More than Rs.10 lakh, the declarant is required to pay only 25% of the minimum penalty leviable along with the due tax and interest.

In respect of penalty appeals, the declarant shall get waiver of the 75% of the penalty levied and immunity from prosecution. In respect of specified tax, the declarant gets complete waiver of/immunity from levy of penalty and immunity from prosecution.

CBDT has received various queries from stakeholders seeking clarifications about various provisions of the Scheme. The issues raised have been examined and a set of 14 FAQs has been issued vide Circular No. 33 of 2016. The circular inter alia provides clarifications regarding eligibility of cases for the Scheme, fate of pending penalty appeals, determination of amount payable under the Scheme, right to appeal in other years, date of withdrawal of pending appeal and time limit for intimation of payment by the declarant and issuance of certificate by the designated authority.

The full text of the circular is available on the departmental website www.incometaxindia.gov.in

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