The Direct Tax Vivad se Vishwas Bill, 2020- Key Highlights

Modi Government 2.0 has presented its first full year budget on 01st February 2020. In order to reduce litigation, the Budget proposes to introduce a new scheme ‘VIVAD SE VISHWAS’.  As per the scheme, the Taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty, provided the payment is made up till March 31, 2020. Further, if the scheme is availed after March 31,2020, an additional amount is required to be paid.

Key Highlights of Vivad se Vishwas Scheme

  • Appeals pending before various appellate forums (i.e. CIT(A), ITAT, High Court & Supreme Court) as on January 31, 2020
  • Payment schedules under the scheme with prescribed timeline is tabulated below:
Particulars of Case Before March 31, 2020 After March 31, 2020 up to the date to be notified
Case involving disputed tax 100% of disputed tax 110% of disputed tax

(additional 10% not to exceed interest/penalty on such disputed tax)

Case involving disputed penalty, interest, fee 25% of disputed penalty /interest/ fees 30% of disputed penalty/interest/ fees
  • A declaration is required to be furnished before the Commissioner of Income Tax (‘CIT’) with regard to non-challenging the issues before any appellate forum on any ground;
  • Within 15 days of filing such declaration, the CIT shall issue a certificate specifying the amount payable of disputed tax/ interest/ penalty/ fee;
  • On issuance of the certificate, the appeal shall be deemed to have been withdrawn;
  • The amount payable, once determined, needs to be deposited within 15 days from the date of receipt of the certificate and to be intimated to the CIT

When Benefit of Vivad se Vishwas Scheme, shall not be applicable-

  • Search and seizure cases, if it relates to any tax arrear
  • Appeals related to foreign sourced undisclosed income/ asset
  • Appeals related to Assessment year in which prosecution has been instituted
  • Appeals related to assessment/ reassessment made in pursuance of information received from foreign jurisdiction under agreements for double taxation relief
  • Appeal is pending before DRP or revision proceeding under section 263
  • Appeal is pending before CIT(A) in relation to which notice of enhancement has been issued
  • To any person where order of detention under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 has been made on or before filing of declaration, subject to certain specified exceptions
  • To any persons where prosecution for any offence punishable under the provisions of the Indian Penal Code and other specified Acts has been instituted, on or before filing of declaration
  • Any other person notified under Section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, on or before filing of declaration

Intent of Law behind introduction of Vivad se Vishwas Scheme

Over the years, the pendency of appeals filed by taxpayers as well as department has increased, due to the number of appeals filed are much higher compared to number of appeals disposed-off. The lock-up amount in disputed tax matters as on the 30th November, 2019 is Rs. 9.32 lakh crores which is approximately equal to one-year direct tax collections. Therefore, there was an urgent need to provide resolution for these pending tax disputes.

The government scheme of ‘Vivad se visvas’ will address this issue of pending litigations. This scheme will benefit the Government by generating timely revenue as well as the taxpayers by saving their resources which they used to deploy in dispute resolution. Taxpayers can now focus more towards their business activities.

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