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The Vivad se Vishwas scheme rolled out by the central government earlier this year for settling direct tax disputes has generated interest among the public and private sector companies for settling cases with a total tax claim of about 1.19 trillion.

Finance secretary Ajay Bhushan Pandey said in an interview that the government received applications for settling nearly 43,000 cases from private sector firms involving tax amounts of 13,000-14,000 crore. The remaining cases involve public sector companies, which have already shown interest in settling cases of 1.05 trillion.

“Even during the pandemic, central PSUs have expressed willingness to settle disputes for a tax amount of 1.05 trillion. They will be filing for it within the extended period," Pandey said. Assessees have till 31 December to sign up for the scheme and pay the principal amount without any additional charges by the end of March.

The response from firms indicates the scheme is set to fetch rich dividends for the government’s bid to reduce tax litigation and de-clog overburdened courts. It will also be a source of revenue for the exchequer.

The Centre has taken several steps to reduce tax litigation, including offering a scheme to settle legacy disputes relating to excise and service taxes. It also raised the monetary threshold for the tax department to file appeals at various judicial platforms. The department had also withdrawn more than 13,300 appeals from income tax tribunals, high courts and the Supreme Court, after raising the monetary threshold for filing appeals last August, minister of state for finance Anurag Thakur told the Lok Sabha on 14 September.

Amid the covid crisis, the finance ministry gave extra time to businesses to sign up for the scheme, which offers assessees a chance to pay disputed arrears without interest and penalty. It also offers immunity from prosecution.

The government is on a drive to ensure the scheme covers as many disputes as possible and field officers have been asked to reach out to parties and help them sign up for it. Last week, the government gave extra time for those who sign up by December end to make the payment without additional charges till the end of March.

“Now we are requesting taxpayers to complete filing of forms before 31 December. They can make the payment by 31 March," Pandey explained.

Recently, the ministry took steps to reduce the discretion of officers and made assessments and appeals within the department a faceless process using technology to make tax administration less prone to disputes. Disputes relating to wealth tax, securities transaction tax, commodity transaction tax and tax on online advertisements charged by the I-T department are not covered under the scheme.

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