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Govt to broaden scope of tax dispute resolution scheme

  • Cabinet’s decision to move amendments to the Direct Tax Vivad se Vishwas Bill, 2020 is based on suggestions received during Sitharaman’s post-budget industry consultation
  • As per the amendments proposed, the Vivad Se Vishwas scheme will cover cases where search and seizure have taken place where the recovery is below Rs5 crore

NEW DELHI : The government on Wednesday decided to broaden the scope of the direct tax dispute resolution scheme Vivad Se Vishwas, seeking to settle more disputes and mop up a larger part of the tax dues locked up litigation.

The cabinet decision to move amendments to the Direct Tax Vivad se Vishwas Bill, 2020, tabled in Parliament last week, is based on suggestions received during finance minister Nirmala Sitharaman’s post-budget industry consultation, explained union minister Prakash Javadekar at a briefing.

“After the union budget, the finance minister discussed with stakeholders and got suggestions from them. On the basis of these suggestions, there are new amendments to be moved in this session of Parliament," said Javadekar. The minister said that as per the amendments proposed, the scheme will also cover cases where search and seizure have taken place where the ‘recovery’ is below Rs5 crore. The minister expressed hope that many taxpayers will take the benefit of the scheme and settle cases.

The cabinet decision also allows assessees to opt for the scheme by paying 50% of the total tax demand in cases where the taxpayer has won the case, said Javadekar. This would prevent the Income Tax department from appealing against the court order that favoured the taxpayer. Disputes pending at various platforms including tribunals, courts and arbitration panels are covered by the scheme.

As per official estimate, there are 4,83,000 direct tax related disputes pending at various platforms involving tax dues of Rs9.32 trillion. At a post-budget interaction with businesses and traders in Kolkata on Sunday, revenue secretary Ajay Bhushan Pandey had said that various suggestions have been noted including the one for extending the scheme to tax disputes where assessment orders have been made but appeals have not yet been filed.

If the scheme is a success, it will be a revenue boost to the government and help clear up courts and tribunals of pending cases.

The scheme allows beneficiaries to pay the disputed tax arrears without interest and penalty if paid before 31 March. If paid later, but before the end of first quarter of FY21, the amount due will go up by 10%. The scheme also offers immunity from prosecution to those who sign up for it.

In case the tax dispute is over penalty, interest or fee, the settlement amount payable is 25% of the dues if paid before the end of March. If paid in the next quarter, the payable amount will go up to 30%.

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