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Business News/ News / India/  Government mulls amnesty plan to resolve customs issues
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Government mulls amnesty plan to resolve customs issues

The Centre is considering a one-time amnesty plan for the resolution of legacy disputes pertaining to customs duty, after the success of Sabka Vishwas for settlement of excise and service tax cases, and Vivad se Vishwas for income-tax issues, two people aware of the matter said, seeking anonymity

With the industry demanding a chance to resolve past disputes related to customs duty, the government is actively considering such a solution (Bloomberg)Premium
With the industry demanding a chance to resolve past disputes related to customs duty, the government is actively considering such a solution (Bloomberg)

The Centre is considering a one-time amnesty plan for the resolution of legacy disputes pertaining to customs duty, after the success of Sabka Vishwas for settlement of excise and service tax cases, and Vivad se Vishwas for income-tax issues, two people aware of the matter said, seeking anonymity.

With the industry demanding a chance to resolve past disputes related to customs duty, the government is actively considering such a solution, they added.

The government and businesses are embroiled in legacy disputes such as customs classification, disagreement over valuation and rules of origin issues, they added.

“Previous dispute resolution schemes have been highly successful. They helped people, especially small businesses, immensely in getting rid of their past baggage of disputes and move ahead with a clear slate. A similar scheme is expected, possibly in this budget," one of the two officials said.

Finance minister Nirmala Sitharaman had proposed the first legacy dispute resolution mechanism for central excise and service tax in her first budget on 5 July 2019, for smoother functioning of the goods and services tax (GST) regime. “GST has just completed two years. An area that concerns me is that we have huge pending litigation from pre-GST regime. More than 3.75 trillion is blocked in litigation in service tax and excise. There is a need to unload this baggage and allow business to move on," she had said in her budget speech. Last year, she proposed the Vivad se Vishwas (No Dispute, but Trust) for reducing litigation even for the direct taxes regime. “I hope taxpayers will make use of this opportunity to get relief from vexatious litigation process."

Sabka Vishwas (Everyone’s Trust) Legacy Dispute Resolution Scheme (SVLDRS) was introduced on 1 September 2019 with the objective of reducing litigation so that taxpayers could focus on compliance with the GST regime. The scheme provided relief in payment of disputed tax amounts ranging from 70% to 40% of the tax amount and a waiver of interest and penalty.

SVLDRS saw about 190,000 declarations by taxpayers involving tax dues of about 90,000 crore, the second official said. The Vivad se Vishwas scheme is still under operation; the last date for taxpayers to utilize it is 31 January, he added.

“An amnesty scheme along the lines of Vivad se Vishwas or other similar schemes (SVLDRS) might be a welcome decision but would largely be dependent on the implementation," said Ranjeet Mahtani, partner at consulting firm Dhruva Advisors LLP.

“As we move towards a faceless system, it will be in order to resolve longstanding disputes to clear up the burdened judicial pipeline, as also to upgrade the law to keep up with the times, technology and international best practices. Customs law and border protection is now as much an economic system as a geopolitical tool, and thus must keep up with times," Mahtani added.

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Published: 21 Jan 2021, 05:34 AM IST
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