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Key Highlights of the Direct Tax Vivad se Vishwas Bill, 2020

Key Highlights of the Direct Tax Vivad se Vishwas Bill 2020

Vivad se Viswas scheme is launched by Ministry of Finance in LokSabha on 5th February 2020.It is a tax dispute Redressal mechanism which is introduced in Direct Tax regime so that taxpayers whose tax demands and disputes related to Income Tax are pending as on 31st January, 2020 [irrespective of whether the demand is pending or has been paid], can pay their taxes and settle disputes by 31st March, 2020.

Tax payers are promised certain benefits for availing this scheme such as a complete waiver of interest and penalty.In case of failure to pay tax within 31st March 2020, the defaulter taxpayer will be allowed to pay taxes till 30th June 2020, but with 10% more on the tax. The appeals and disputed matters might be related to any assessment years, and may be related to TDS or TCS.

At present there are 4,83,000 direct tax cases pending in various appellate forums.As on the 30th November, 2019, the amount of disputed direct tax arrears is Rs. 9.32 lakh crores. Therefore, there is an urgent need to provide such type of dispute resolution scheme as one time solution for long time pending disputes.

Appellate Forums under this Scheme:

It includes disputes pending in all appellate forums such as Supreme Court, High Courts, Income Tax Appellate Tribunal, etc.

Amount payable under the Scheme:

A B C
Dispute relating to Amount Payable up to 31st March 2020 Amount payable after 31st March 2020 up to 30th June 2020
Payment of Tax Amount of Disputed Tax

Amount payable as per Column B

plus

10% of the amount of disputed tax.

OR

Interest and Penalty relating to that tax, whichever is lower.

Relief Waiver of interest or penalty up to 100%. Waiver of Interest and Penalty in excess of 10% of disputed tax amount.
Payment of fees, interest or penalty Amount of Disputed Tax 25% of the amount under such dispute.
Amount payable as per Column B
plus
Additional 5% of the amount under such dispute.
Relief 75% of the amount under such dispute. 70% of the amount under such dispute.

Process of dispute resolution under this Scheme:

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Ineligibility of Appellant under this Scheme:

An appellant will be ineligible to avail benefit of this scheme under following circumstances:

  • If particulars submitted by the appellant are found to be false.
  • The appellant violates any of the conditions referred to in the IT Act.
  • The appellant seeks any remedy or claim in relation to that dispute.

Disputes not covered under this scheme:

  • Disputed tax arising out of search or seizure proceedings where disputed tax is more than 5 Crore;
  • The prosecution has been initiated before filing of the declaration;
  • Tax arrears is in relation to undisclosed foreign source income;
  • Where an addition is based on the information received from a foreign country as part of an exchange of information u/s 90 or 90A;
  • Where enhancement proposed by the CIT(A);
  • Where any person who has been detained under The Conservation of Foreign Exchange and Prevention Of Smuggling Activities Act, 1974, before the filing of a declaration;
  • Where, any person, in whose case the prosecution has been initiated prior to the filing of a declaration under IPC, the Unlawful Activities (Prevention) Act, 1967, NDPS Act, 1985, PC Act, 1988, PMLA Act, 2002, Prohibition of Benami Property Transactions Act, 1988;
  • Any person notified under Special Court (Trial of Offences Relating to Securities) Act, 1992, before the filing of a declaration.

Benefits of the Scheme:

  • Government will generate timely revenue.
  • Taxpayers will be able to utilize the time, energy and resources saved by opting this dispute resolution scheme towards their business activities.
  • Once a dispute is resolved as per this scheme, the designated authority cannot levy interest or penalty in relation to that dispute.
  • No appellate forum can make a decision in relation to that dispute which has been resolved already. Such matters cannot be reopened in any proceeding under any law, including the IT Act.

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