DTVSV Scheme was announced in Budget 2020 as “No Dispute but Trust Scheme-Vivad se Vishwas Scheme” to settle pending disputes relating to direct taxes. It is an attempt to release 9.32 trillion (as on 30th Nov 2019) blocked in approximately 483000 appeals pending at various appellate forums. The Scheme got assent from Hon’ble President on 17th March 2020 and became Direct Tax Vivad se Vishwas Act, 2020.
> PURPOSE OF THE SCHEME
The main purpose of the scheme is to –
1) Reduce pending litigation
2) Generate revenues for the Govt.
3) Get relief from pending dispute by paying disputed tax and get waiver from payment of interest and penalty and also get immunity from prosecution.
> ELIGIBILITY OF THE SCHEME
1) The Appeals, Writ Petition, SLP and Arbitration filed by Tax Payer or Deptt before 31 Jan 2020 or Appellable Orders i.e. Orders for which time limit for filing appeal has not expired on 31st Jan 2020.
2) Cases pending before Dispute Resolution Panel (DRP) or the cases where DRP has issued direction on or before 31 Jan 2020 but Order has not yet been passed.
3) Cases where assesse has filed revision application u/s 264 on or before 31st Jan 2020.
4) Dispute where payment has already been made shall also be eligible.
> FEATURES AND CERTAIN TERMS
1. The tax payer can enter into scheme where there is disputed tax/ TDS/TCS. In case there is no disputed tax taxpayer can opt for the scheme for pending appeals relating to disputed penalty, interest and fees. Disputed tax also includes tax on enhancement notice issued by Commissioner Appeals.
2. Where pending dispute relates to reduction of Loss, Depreciation and MAT Credit, the tax payer has option-
(a) Pay tax on reduced amount.
(b) Not to carry forward the said amount
3. Certain Terms-
(a) Disputed Tax= Tax+ Surchage+ Cess against which appeal is pending.
(b) Tax Arrears= Disputed Tax+ Penalty+ Interest (Charged or Chargeable).
4. If there is any rectification pending in relation to disputed tax, the tax shall be calculated after giving effect to rectification order passed, if any.
1. If excess payment is made before filing the declaration, refund shall be issued without interest.
2. If tax is paid after availing benefit of Scheme and later tax payer decides to take refund of tax, refund will not be granted
1. If case is filed by assesse-
|PARTICULARS||DISPUTED TAX||DISPUTED PENALTY, INTEREST AND FEES|
|If payment is made on or before 31st Dec 2020||100%
|If payment is made after 31st Dec 2020||Additional 10%
If additional 10% exceeds interest and penalty, excess shall be ignorned
If additional 5% exceeds interest and penalty, excess shall be ignorned
2. If case is filed by income tax department-50% of above rates.
3. In case the issue is decided in favour of tax payer by higher appellate forum-50% of above rates.
4. If due to lack of jurisdiction, ITAT has quashed Astt Order and deptt is in appeal with HC and there is no disputed tax because there is no asstt Order- Enter into Scheme and pay 50% of disputed tax that would be restored if the deptt was to win the appeal in HC.
> PROCEDURE OF FILING DECLARATION
2. The Form is to be filed in similar way as ITR is filed i.e. by Aadhar OTP, EVC or DSC.
3. Appeal pending before Commissioner Appeals and Tribunal shall be deemed to have been withdrawn from the date on which certificate is issued by DA. If case is pending before High Court, Supreme Court or Arbitration declarant shall withdraw appeal with leave of Court after issuance of Certificate by DA.
4. Payment shall be made in 400 head.
> EXCLUSIONS FROM SCHEME
1. Search case if disputed tax in a year is more than 5 Crores. For Eg: If there are 7 assessments out of which in 4 assessments disputed tax is 5 crore or less then tax payer can opt for 4 assessments.
2. Where Prosecution has been initiated and is pending in Court. But if only notice for prosecution issued, allowed to enter into the Scheme.
3. Cases involving undisclosed foreign assets and income.
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.
7. Disputes relating to wealth tax, security transaction tax, commodity tax and equalisation levy is not covered.
> CLARIFICATIONS MADE IN CIRCULAR
1. Settlement of penalty appeal without settling quantum appeal is not possible.
2. For one pending appeal all issues are required to be settled and if one of the issues makes the declaration invalid, no declaration can be filed. Picking and choosing of issues are not allowed. Eg: In case disputes tax includes qualifying tax arrears and non-qualifying tax arrears i.e. if it includes dispute relating to undisclosed foreign assets then declaration cannot be filed.
3. If Writ has been filed against notice u/s 148 and no assessment order has been passed, no declaration can be filed because there is no determination of income against said notice.
4. Waiver application filed requesting waiving of interest u/s 234A, 234B and 234C are not covered under the Scheme because Waiver applications are not appeal.
5. For Eg: If for A.Y.2015-16 assessment was completed u/s 143(3) and appeal is pending with Tribunal and later for same A.Y. order is passed u/s 147/143(3) and appeal is pending with CIT then tax payer has an option either to settle both appeals or any of the appeal. If he chooses to settle both appeal then aggregate of both tax payable shall be filed in Form-1.
6. In case ITAT has passed Order giving relief on 2 issues and confirming addition on 3 issues, then tax payer has option either to file declaration for 3 issues or 5 issues. If he files declaration for 3 issues then deptt would be free to file appeal against 2 issues.
7. Where tax determined by DA is not acceptable to taxpayer-
(a) Can appeal withdrawn be reinstituted- Withdrawal of appeal is required after receiving certificate of tax payable.
(b) Can appeal be filed against amount determined as payable by DA in Certificate- No
8. If payment is not made due to financial difficulties after filing declaration or declarant violates any conditions of the Act, then declaration shall be null and void and appeal withdrawn shall be revived.
9. Result of this VSV cannot be applied to same issues pending before AO.
> Our Comments
The beauty of the Scheme is that you have to pay only disputed tax and get relief from penalty, interest and prosecution. Normally penalty and interest surpasses tax and it becomes very difficult for taxpayer to pay the full amount. The Scheme is therefore beneficial for those tax payer who do not wish to litigate or where amount of tax involved is very less than tax interest and penalty. But if there is high amount of tax involved and tax payer faces liquidity crunch, it may not be possible to opt the Scheme. Also the Scheme is not beneficial if there are high chances to win the case.
The above comments do not constitute professional advice. The Author can be reached at [email protected] My name is CA Divya Agrawal and I am Practising Chartered Accountant. I also upload educational videos in You tube and name of my channel is FINANCIAL TREE COMPANY. You can also reach me on website www.fintaxsolutions.in.net. My aim is to help people in improving their financial health by spreading knowledge and love.