Direct Tax Vivad se Vishwas Act, 2020 is An Act to provide for resolution of disputed tax and for matters connected therewith or incidental thereto.

During the Union Budget, 2020 presentation, the ‘Vivad se Vishwas’ Scheme was announced to provide taxpayers a lucrative opportunity to settle direct tax disputes by waiving interest and penalty on their pending taxes. The Scheme/ Bill has now become a law after completion of due procedure and accordingly published in the Gazette of India on 17th March 2020 as ‘The Direct Tax Vivad se Vishwas Act, 2020’, herein after referred as ‘the Act’.

Objective of Direct Tax Vivad se Vishwas Scheme

Vivad se vishwas Scheme, 2020Tax disputes consume copious amount of time, energy and resources both on the part of the Government as well as taxpayers. Moreover, they also deprive the Government of the timely collection of revenue. Therefore, there is an urgent need to provide for resolution of pending tax disputes. Major objectives of the Act are as follows:-

1. Reduce income tax pending litigations.

2. Generate timely revenues for the government.

3. Help taxpayers to end their tax disputes with the department by paying disputed tax and get waiver from payment of interest and penalty.

4. Taxpayers will be able to deploy the time, energy and resources towards their business activities by opting for such dispute resolution.

Amount Payable and Relief under Direct Tax Vivad se Vishwas Scheme

Nature of tax arrears Amount payable on or before 30 June 2020* Amount payable on or after 01.07.2020 but on or before the last date*
Where tax arrears include disputed tax, disputed interest and disputed penalty Amount of the disputed tax Amount of disputed tax plus 10% thereof. The additional 10% will be restricted to the amount of interest and penalty
Where 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
Where tax arrears (including interest & penalty)  determined on the basis of search u/s 132, 132A of the IT Act. Amount of the disputed tax plus 25% of thereof. The additional 25% will be restricted to the amount of interest and penalty Amount of the disputed tax plus 35% of thereof. The additional 35% will be restricted to the amount of interest and penalty
  • Initial due date as per the Act was 31st March 2020, which is extended to 30th June 2020, one of the relief measures announced by Govt of India in view of COVID-19 outbreak on 25th March 2020.

Note: Provided that in a case where an appeal or writ petition of SLP is filed by Income Tax Authority, the amount payable shall be 50% of amount in table above calculated in such manner as may be prescribed.

Eligibility under Direct Tax Vivad se Vishwas Scheme

1. Cases, where an appeal or writ petition or special leave petition (SLP) is pending before an appellate forum as on 31st January 2020.

2. Cases, where an order has been passed by AO or CIT(A) or ITAT in an appeal or by the High Court in a writ petition, but time for filing any appeal or SLP has not expired as on 31st January 2020.

3. Cases, where objection before Dispute Resolution Panel (DRP) u/s 144C of the IT Act has been filed and DRP has not issued any directions as on 31st January, 2020.

4. Cases, where DRP has issued directions u/s 144C(5) of the IT Act and the AO has not passed any order u/s 144C(13) as on 31st January, 2020

5. Cases, where an application for revision u/s 264 of the IT Act has been filed and such application is pending as on 31st January 2020.

Exclusion from Direct Tax Vivad se Vishwas Scheme

The Provisions of the Act shall not apply on:-

1. Search cases if disputed tax in a year is more than Rs.5 crore

2. Cases where prosecution has been initiated by the department under Income-tax Act or under Indian Penal Code.

3. Cases involving undisclosed foreign income and assets.

4. Cases completed on the basis of information received from foreign jurisdiction.

5. Cases where person is notified under Special Courts(Trial of Offences Relating to Transactions in Securities) Act, 1992 or detained under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974.

6. Cases covered under Narcotic Drugs and Psychotropic Substances Act, Unlawful Activities (Prevention) Act, Prevention of Corruption Act, Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, Prevention of Money Laundering Act, Prohibition of Benami Property Transactions Act.

Procedure for availing benefit of Direct Tax Vivad se Vishwas Scheme

(Filing of Declaration / Time & Manner of Payment)

1. Assessee (Declarant) shall furnish a declaration in ‘Form 1’ consisting details of eligibility, tax disputes, tax arrears etc. along with an undertaking in ‘Form-2’ regarding waiving his / her right, to seek or pursue any remedy etc.

2. The designated authority shall grant a certificate in ‘Form-3’ to declarant within 15 days of receipts of declaration containing particulars of tax arrears and amount payable.

3. The declarant shall pay the amount within 15 days from the date of receipt of certificate in Form -3 and shall intimate the authority of such payment in ‘Form-4’.

4. Thereupon, the designated authority shall pass an order in ‘Form-5’ stating that declarant has paid the amount.

Some other important aspects of  Direct Tax Vivad se Vishwas Act, 2020

1. Any amount paid in pursuance of declaration shall not be refundable under any circumstances. However where the declarant had, before filing the declaration had paid any amount in respect of his tax arrears which exceeds the amount payable under the Act, he shall be entitled to a refund of such excess amount but shall not be entitled to interest on such excess amount u/s 244A of the IT Act.

2. Any appeal before ITAT or CIT(A) shall be deemed to have been withdrawn from the date on which certificate in ‘Form-3’ is issued by designated authority.

3. Any appeal before the appellate forum or any writ petition before the High Court or the Supreme Court, or any arbitration, conciliation or mediation initiated by declaration shall be withdrawn after issuance of certificate in ‘Form-3’ and proof of such withdrawn shall be intimated in ‘Form-4’.

4. If declarant furnishes any false particulars, violates any conditions or does not act in accordance with undertaking furnished in Form-2, the declaration shall be presumed never to have been made and all the consequences under the IT Act shall be deemed to have been revived.

Information Required in Form 1:-

1. General information: Name/PAN/Aadhar & Mobile

2. Information relating to Dispute

3. Information relating to tax Arrears, amount payable under the Act and payment already made, if any.

Sources:

The Direct Tax Vivad se Vishwas Act, 2020

The Direct Tax Vivad se Vishwas Rules, 2020

Disclaimer:- This material and the information contained herein are intended to provide general information on a particular subject. Before making any decision or taking any action you should consult a qualified professional adviser. Author shall not be responsible for any loss whatsoever sustained by any person who relies on this material.

Author Bio

Qualification: CA in Practice
Company: Nagpal Nagpal and Associates
Location: Delhi, New Delhi, IN
Member Since: 30 Mar 2019 | Total Posts: 4
Balram Sharma is a fellow member of Institute of Chartered Accountants of India and completed his graduation (Bachelor in commerce) from University of Delhi, New Delhi. He has also qualified Diploma of Information Systems Auditor (DISA). He carries extensive professional experience in various fields View Full Profile

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One Comment

  1. SHAFI MOHAMMAD says:

    I have deposited Rs. 40000/- as self asstt tax including interest of Rs. 10000/-. Now asstt completed and created the demand of Rs. 100000/- which includes interest u/s 234B and C assume 50000/-. I filed appeal and challenged entire asstt additions. As per VSV scheme what should be tax disputed tax and what amount i have to be deposited in VSV scheme is it 10000/- (50000-40000) or 20000 (50000-30000) ? please clarify.

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