Earlier this month, the government has introduced the Direct Tax Vivad Se Vishwas (No dispute but trust) Bill in the Lok Sabha. This was mainly due to direct taxes worth over Rs9 lakh crore locked up in litigation.
Under the proposed ‘Vivad Se Vishwas’ scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided he pays by 31 March 2020.
Those who avail this scheme after 31 March 2020 will have to pay some additional amount. The scheme will remain open till 30 June 2020.
According to finance minister Nirmala Sitharaman, there are 4.83 lakh direct tax cases pending in various appellate forums such as commissioner (appeals), income tax appellate tribunals (ITATs), High Courts and the Supreme Court.
Here are the frequently asked questions (FAQs) on the Scheme…
1. What is The Direct Tax Vivad Se Vishwas Scheme (DTVSVS, 2020), 2020?
Ans. ‘The Direct Tax Vivad Se Vishwas Scheme (DTVSVS, 2020), 2020’ is a significant Dispute resolution-cum-amnesty scheme for liquidation of past disputes of Income Tax department. The proposed scheme is apparently a win-win situation for all concerned as it offers significant relief from the burden of disputed fee, interest and penalty.
2. Which appeals will be the subject of the Scheme?
Ans. According to the proposed Bill, the DTVSVS, 2020 shall be applicable to appeals filed by taxpayers or the Government, which are pending with the Commissioner (Appeals), Income tax Appellate Tribunal, High Court or Supreme Court as on the 31st day of January, 2020 irrespective of whether demand in such cases is pending or has been paid.
3. Are there any exceptions or the type of cases that not covered under the scheme?
Ans. The benefit of this scheme shall not be available in following cases:-
a. in respect of tax arrear-
i. relating to an assessment year in respect of which an assessment has been made under section 153A or section 153C of the Income-tax Act, if it relates to any tax arrear;
ii. relating to an assessment year in respect of which prosecution has been instituted on or before the date of filing of declaration;
iii. relating to any undisclosed income from a source located outside India or undisclosed asset located outside India;
iv. relating to an assessment or reassessment made on the basis of information received under an agreement referred to in section 90 or section 90A of the Income-tax Act, if it relates to any tax arrear;
v. relating to an appeal before the Commissioner (Appeals) in respect of which notice of enhancement under section 251 of the Income-tax Act has been issued on or before the specified date;
b. to any person in respect of whom an order of detention has been made under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 on or before the filing of declaration:
i. such order of detention, being an order to which the provisions of section 9 or section 12A of the said Act do not apply, has not been revoked on the report of the Advisory Board under section 8 of the said Act or before the receipt of the report of the Advisory Board; or
ii. such order of detention, being an order to which the provisions of section 9 of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the review under sub-section (3) of section 9, or on the report of the Advisory Board under section 8, read with sub-section (2) of section 9, of the said Act; or
iii. such order of detention, being an order to which the provisions of section 12A of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the first review under sub-section (3) of that section, or on the basis of the report of the Advisory Board under section 8, read with sub-section (6) of section 12A, of the said Act; or
iv. such order of detention has not been set aside by a court of competent jurisdiction;
c. to any person in respect of whom prosecution for any offence punishable under the provisions of the Indian Penal Code, the Unlawful Activities (Prevention) Act, 1967, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Prevention of Corruption Act, 1988, the Prevention of Money Laundering Act, 2002, the Prohibition of Benami Property Transactions Act, 1988 or for the purpose of enforcement of any civil liability has been instituted on or before the filing of the declaration or such person has been convicted of any such offence punishable under any of those Acts;
d. to any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 on or before the filing of declaration.
4. How can an eligible person avail benefit under this scheme?
Ans. An eligible person has to file a declaration before the designated authority, in the prescribed form.
The designated authority, within 15 days, shall determine the tax payable by the declarant and issue a certificate to the declarant indicating the amount payable by him;
Declarant shall make payment within 15 days of issuance of certificate and intimate the details of payment to the designated authority.
The Designated authority pass an order stating that tax has been paid.
Upon filing the declaration, any appeal pending before the appellate forum in respect of the disputed income or disputed interest or disputed penalty or disputed fee and tax arrear has to be withdrawn.
The declarant shall furnish an undertaking waiving his right, whether direct or indirect, to seek or pursue any remedy or any claim in relation to the tax arrear.
5. What if someone makes a false declaration or violate any conditions?
Ans. The declaration shall be deemed to have been never made and in such cases, all the proceedings and claims which were withdrawn under the scheme and all the consequences shall be deemed to have been revived.
6. How is the relief computed for people eligible to avail benefit under this scheme?
7. How this scheme is different than the Sabka Vishwas Scheme, 2019 for Indirect Tax disputes?
Ans. Unlike this scheme, the SV(LDR) Scheme, 2019 provided the relief not only from interest and penalty but also from the tax amount ranging from 0% to 70%. Moreover, the coverage in the SV(LDR) Scheme 2019 was also very wide i.e. all types of disputes from Voluntary disclosure to Show cause notices were considered under the SV(LDR) Scheme, 2019.
(Advocate KK Ramani is practising law since 1964 and is actively engaged in legal consultancy. Mr Ramani has authored and co-authored several books and has contributed many articles in Income Tax Review, Bombay Chartered Accountants' Journal, Financial Express and Economic Times.)