VIVAD SE VISHWAS scheme Bill, 2020 was introduced to provide for resolution of disputed tax and for matters connected therewith or incidental thereto.
Article 19 of Indian Constitution provides freedom of Speech and Expression, every citizen of India has given right to raise his voice and express his views, as the old quote says “Individuals as Nature”, which leads to differences of opinion among the individuals and which ultimately results in Disputes to which we call VIVAD in Hindi.
Same is the case was the interpretation of law is required, specifically in case of Tax Laws Assessee will see the law in the way which is more beneficial to him and on the other hand Tax Authorities will see the Tax laws which is more favourable to them, this lead to difference of opinion which requires involvement of Judicial authority to decide on the particular issue which may be fact base or interpretation of Law.
In the Budget 2020 Finance Minister Srimati. Nirmala Sitaraman said that “Currently, there are 4,83,000 direct tax cases pending in various appellate forums i.e. Commissioner (Appeals), ITAT, High Court and Supreme Court”, which require to be reduced to a minimum number and for the said purpose VIVAD SE VISHWAS scheme was announced.
Will understand the VIVAD SE VISHWAS scheme in question-answer format as follows:
Q 1 – Why VIVAD SE VISHWAS scheme is introduced or proposed?
Answer – VIVAD SE VISHWAS scheme BIll, 2020 was introduced to provide for resolution of disputed tax and for matters connected therewith or incidental thereto.
Q 2 – What are the various concepts need to be known under VIVAD SE VISHWAS scheme?
Answer – following are the various concepts one need to know under VIVAD SE VISHWAS scheme;
1. “appellant” means the person or the income-tax authority or both who has filed appeal before the appellate forum and such appeal is pending on the specified date.
2. “appellate forum” means the Supreme Court or the High Court or the Income Tax Appellate Tribunal or the Commissioner (Appeals)
3. “declarant” means a person who files declaration under section 4;
4. “declaration” means the declaration filed under section 4;
5. “designated authority” means an officer not below the rank of a Commissioner of Income-tax notified by the Principal Chief Commissioner for the purposes of this Act.
6. “disputed fee” means the fee determined under the provisions of the Income-tax Act, 1961 in respect of which appeal has been filed by the appellant;
7. “disputed income”, in relation to an assessment year, means the whole or so much of the total income as is relatable to the disputed tax
8. “disputed interest” means the interest determined in any case under the provisions of the Income-tax Act, 1961, where—(i) such interest is not charged or chargeable on disputed tax;
(ii) an appeal has been filed by the appellant in respect of such interest;
9. “disputed penalty” means the penalty determined in any case under the provisions of the Income-tax Act, 1961, where—(i) such penalty is not levied or leviable in respect of disputed income or disputed tax, as the case may be;(ii) an appeal has been filed by the appellant in respect of such penalty
10. “disputed tax”, in relation to an assessment year, means-
(i) tax determined under the Income-tax Act, 1961 in accordance with the given formula : (A-B)+(C-D)
11. “specified date” means the 31st day of January 2020;
12. “tax arrear” means,—
(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;
Q 3 – Who is eligible under VIVAD SE VISHWAS scheme and what is the amount of benefit or amount payable under the scheme?
Answer – Declarant is an eligible person who has to file a declaration to the designated authority in accordance with the provision of section 4 in respect of the tax arrears on or before the last date. Amount of benefit or payable are as under :
|Sr. No.||Nature of Tax Arrears||Amount payable if paid on or before 30.03.2020||Amount payable if paid on or after 01.04.2020 but before last date|
|a.||Where the tax arrear is aggregate amount of disputed tax, interest chargeable or charged on such disputed tax and penalty leviable or levied on such disputed tax.||Amount of Disputed tax to be paid. (waiver of Interest and penalty)||The aggregate of amount of disputed tax and 10% of disputed tax.
Additional 10% shall not exceed amount of interest or penalty leviable or levied. Any excess shall be ignored.
|b.||Where the tax arrears relates to disputed interest or disputed penalty or disputed fee||25% of disputed interest or disputed penalty or disputed fee||30% of disputed interest or disputed penalty or disputed fee|
Q 4 – In which form declaration to be filed and what are the particulars to be furnished ?
Answer – Declaration to be filed before the designated authority in such form and verified in such manner as may be prescribed; it will be prescribed in the rules for carrying out the provision of this act.
Q 5 – What will be the status of appeal if the declarant opts for VIVAD SE VISHWAS scheme and whether he needs to make a separate application for withdrawal of case?
Answer – Appeal status will depend on the Appellate forum before which the case is pending
|Pending appeal status||Withdrawal status of an appeal|
|1. If appeal is pending before CIT(A) or ITAT then;||Upon the filing of declaration any appeal pending shall be deemed to have been withdrawn from the date on which certificate under sub-section (1) of section 5 is issued by the designated authority|
|2. If appeal is pending before the appellate forum or any write before High Court or Supreme court then;||He shall withdraw such appeal or write petition with the leave of court wherever required and furnish such proof of withdrawal along with declaration.|
|3. if declarant has initiated any proceeding for arbitration, conciliation or medication or has given notice thereof then;||He shall withdraw a claim, if any in such proceedings or notice prior to making the declaration and furnish such proof thereof along with the declaration|
Without prejudice to the Above three, declarant shall furnish an undertaking waiving his right, whether direct or indirect, to seek or pursue any remedy or any claim in relation to the tax arrear which may otherwise be available to him under any law for the time being in force, in equity, under statute or under any agreement entered into by India with any country or territory outside India whether for protection of investment or otherwise and the undertaking shall be made in such form and manner as may be prescribed
Q 6 – In which circumstances declaration will not be considered to be valid?
Answer – In the following circumstances ;
(a) any material particular furnished in the declaration is found to be false at any stage;
(b) the declarant violates any of the conditions referred to in this Act;
(c) the declarant acts in any manner which is not in accordance with the undertaking given by him under sub-section (5),
and in such cases, all the proceedings and claims which were withdrawn under section 4 and all the consequences under the Income-tax Act against the declarant shall be deemed to have been revived.
Q 7 – What is the time and manner for payment under the proposed VIVAD SE VISHWAS scheme?
1. After receipt of declaration, the designated authority shall, within a period of 15 days, by order, determine the amount payable by the declarant and grant a certificate to the declarant containing the particulars of tax arrears and the amount payable after such determination, in such form as may be prescribed
2. Thereafter declarant shall pay the amount determine within 15 days of the date of receipt of the certificate and intimate the details of such payment to designated authority in the prescribed form and thereafter the designated authority will pass the order in the prescribed form.
Q 8 – Can the order passed will further be investigated by Income tax authorities?
Answer – No,
It is stated that the amount payable under this Act, shall be conclusive as to the matter stated thereon and no matter covered by such order shall be re-opened in any other proceeding under the Income Tax Act or under any other law for time being in force or under any agreement.
The designated authority shall not institute any proceeding in respect of an offence; or impose or levy any penalty; or charge any interest under the Income-tax Act in respect of tax arrear
Q 9 – Can the amount paid under the scheme be refunded?
Answer – No, section 7 says any amount paid in pursuance of a declaration made under section 4 shall not be refundable under any circumstances.
Q 10 – In which cases this scheme is not applicable?
(a) in respect of tax arrear,—
(i) relating to an assessment year in respect of which an assessment has been made under section 153A or section 153C of the Income-tax Act, if it relates to any tax arrear;
(ii) relating to an assessment year in respect of which prosecution has been instituted on or before the date of filing of declaration;
(iii) relating to any undisclosed income from a source located outside India or undisclosed asset located outside India;
(iv) relating to an assessment or reassessment made on the basis of information received under an agreement referred to in section 90 or section 90A of the Income-tax Act, if it relates to any tax arrear;
(v) relating to an appeal before the Commissioner (Appeals) in respect of which notice of enhancement under section 251 of the Income-tax Act has been issued on or before the specified date;
(b) to 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 on or before the filing of declaration.
(c) to 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 on or before the filing of the declaration or such person has been convicted of any such offence punishable under any of those Acts;
(d) to any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 on or before the filing of declaration.
This article written by CA Mahendra Borhade (FCA, DISA(ICAI), BCOM)