DIRECT TAX VIVAD SE VISHWAS ACT, 2020

The ‘Vivad se Vishwas’ (No Dispute but Trust) Scheme announced by Hon’ble Finance Minister Mrs. Nirmala Sitharaman on 1st February 2020 during her budget speech for FY 2020-21. Last year Govt introduced the same scheme in Indirect taxes which resulted in settling of over 1.89 Lakh cases. As per budget speech there are 4.83 Lakh cases in various appellate forums and therefore Government proposed the same scheme in direct taxes to reduce litigation cases.

Tax dispute consume time, energy and resources both on the part of Govt. as well as taxpayers. In order to expedite the recovery of disputed tax arrears Govt introduced this scheme for early collection of revenues and reduce litigation cases. This will also help Govt to reduce the fiscal deficits swiftly.

Under Vivad se Vishwas scheme taxpayers are only required to pay amount of disputed taxes and they will get immunity from interest, penalty and prosecution if he pays disputed taxes before 31st March 2020. Those who avail this scheme after 31st March 2020 need to pay extra 10 percent of disputed taxes. This scheme will remain operational till 30th June 2020; however, this date may also be extended by few months (probably up to Sep – Dec 2020).

Key Provisions of the Proposed Act

  • Cases outstanding or appeals pending as 0n 31.01.2020 are eligible cases under this scheme.
  • Tax Arrears means: (i) aggregate amount of disputed tax including interest and penalty on such disputed tax, (ii) disputed interest, (iii) disputed penalty or, (iv) disputed fees
  • Amount payable by tax payer (Declarant)
Sl. No. Nature of Tax Arrear Amount Payable up to 31.03.2020 Amount Payable after 31.03.2020 up to last date
(a) Where tax arrear is disputed tax including penalty and interest Amount of disputed tax Sum of disputed tax amount and 10 percent of disputed tax
(b) Disputed interest or penalty or fees 25 percent of total disputed amount 30 percent of total disputed amount
  • The declaration form to be filed by the declarant before the designated authority (not below the rank of CIT as notified by the PCCIT)
  • The designated authority within 15 days from the date of receipt of declaration issue order of amount payable by the declarant/taxpayer and grant certificate to the declarant in form as may be prescribed.
  • The declarant will pay the amount within 15 days of the date of receipt of the certificate and intimate the details of such payment to the designated authority in the prescribed form and the designated authority shall pass order stating that the declarant has paid the amount.
  • Upon filing of declaration any matter pending before any appellate forum shall be deemed to have been withdrawn from the date on which certificate issued by the designated authority.
  • Where the declarant filed any appeal before any appellate forum or any writ petition before the HC or SC against any order in respect of tax arrears, he shall withdraw such appeal or writ petition and furnish proof of such withdrawal along with declaration to be filed.
  • Where the declarant has initiated any proceedings for arbitration, conciliation or mediation under any law for the time being in force or under any agreement entered into anywhere in India or outside India.
  • The declarant shall furnish an undertaking waving his right, directly or indirectly, to seek to any remedy or any claim in relation to the tax arrears which may be otherwise available to him.
  • The declaration shall be presumed to be never made by the declarant, if
    • Any material particulars furnished in the declaration is found to be false at any stage.
    • Declarant violate conditions mentioned in Act
    • Declarant not act as per undertaking given by him.
  • Any amount paid in pursuance of declaration shall not be refunded in any case.
  • The provisions of this Act shall not apply:
    • In respect of tax arrears relating to assessments u/s 153A or 153C of the Act.
    • tax arrear relating to an assessment year in respect of which prosecution has been instituted on or before the date of declaration.
    • Relating to undisclosed income from source outside India or undisclosed asset located outside India.
    • Relating to assessment or reassessment based upon information received as per Sec 90 or 90A of the Act.
    • Tax arrears relating to an appeal before the CIT appeals in respect of which notice of enhancement of income has been issued before 31.01.2020.
    • to any person in respect of whom an order of detention has been made under the provisions of the COFEPOSA Act, 1974 on or before filing of declaration.
    • to any person in respect of whom prosecution for any offence punishable under IPC, Prevention of money laundering, Narcotics drugs Act, benami property act or for the purpose of enforcement of any civil liability has been instituted on or before the filing of declaration.

This scheme is great to close the long pending litigations and help tax payers to shift their energy and resources to tap business opportunities instead of fighting of tax disputes.

Note: This act is yet not notified, therefore, final notified act might contain changes from current provisions.

Feel free to reach out for discussions and clarifications at :

Name: CA Sohil Rana

E-mail Id: ca.sohilrana@hotmail.com

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