After ‘Sabka Vishwas Scheme’ presented in Budget 2019 for settling disputes of Service Tax and Central Excise, similarly in Budget 2020, FM announced a dispute resolution scheme related to direct taxes named as ‘The Direct Tax Vivad se Vishwas Bill, 2020’ which will be separate act after assent of President.
It has been seen that pendency of appeals before the appellate forum i.e. CIT(A), ITAT, High Court and Supreme Court (later known as Appellate Forum) has increased as a result of which a huge amount of Rs. 9.32 lakhs crore related to disputed direct tax has been stuck as on 30th November 2019. This will not only help the government but also taxpayers to save their time, energy and resources.
Eligibility for the scheme: –
1. The appeal which are pending before the Appellate Forum as on 31st Jan 2020 filed either by the assessee or income tax authority and writ petition filed before High Court or Supreme Court are eligible to be availed under this scheme whether demand for such appeal is pending or has been paid.
2. The cases for which the assessment order has been passed and time for filing for appeal has not been expired on 31st January 2020 is covered under this scheme.
3. The cases which are pending before DRP on 31st Jan 2020 and the cases for which directions issued by DRP before 31 Jan 2020 but no order has been passed.
4. Search assessment u/s 153A or 153C of Income Tax Act,1961 if the disputed demand is upto Rs. 5 crores.
5. The cases for which revision has been filed by the assessee u/s 264 on or before 31.01.2020.
disputes covered under the scheme:
The pending appeal may be against:
1. Aggregate amount of disputed tax, interest or penalty on such disputed tax or
2. Disputed interest or
3. Disputed penalty or
4. Disputed fee
5. Disputed TDS or TCS
The calculation of disputed tax will be as per the formula prescribed. The payment will be made as per the following situations: –
|Particulars of dispute||Amount payable on or before 31st Mar 2020||Amount payable on or after 1st April 2020 but before last date*|
|Dispute involving disputed tax inclusive of interest chargeable or charged or penalty leviable or levied on such disputed tax||100% of disputed tax (125% of disputed tax in search assessment) Hence complete waiver of interest and penalty on such disputed tax||110% of disputed tax (135% of disputed tax in search assessment) But such excess of 10% shall not exceed the aggregate amount of interest and penalty|
|Dispute involving disputed interest, penalty or fee||25% of disputed interest, penalty or fee||30% of disputed interest, penalty or fee|
*Last date: Last date is yet to be notified.
If the appeal is filed by the Department or Department has lost a case, then the percentage mentioned in above table will be halved in each case i.e. declarant is required to pay only half of amount as compare to those appeals filed by the assessee.
Non-Eligibility for the scheme:
a) In respect of tax arrear:
1. For which the search assessment has been made u/s 153A or 153C of Income Tax Act if disputed demand is more than Rs.5 crores.
2. For which the prosecution has been initiated on or before the date of filing of declaration or
3. For any undisclosed income from source located outside India or undisclosed asset located outside India or
4. For assessment or reassessment made on the basis of information received under an agreement referred to in section 90 or section 90A of Income Tax Act.
5. For which the notice of enhancement has been issued by CIT(A) on or before 31st Jan, 2020.
b) Order of detention has been made under the provision of Conversation of Foreign Exchange and Prevention of Smuggling Activities Act,1974 on or before the date of filing of declaration.
c) Prosecution for any offence punishable under Indian Penal Code or as per the provisions of specified acts has been made on or before the date of filing of declaration.
Steps for availing the scheme:
1. Declarant shall file a declaration in prescribed form to designated authority not below the rank of CIT.
2. Within 15 days from the date of receipt of declaration, designated authority shall determine the amount payable and grant a certificate in respect of amount payable.
3. Within 15 days from the date of receipt of certificate, declarant shall pay the amount determined and intimate the same to designated authority, consequently designated authority shall pass an order to this effect.
4. Order passed shall be conclusive in nature and no matter related to that order shall be reopened in any proceedings under any law.
5. After declaration being filed by declarant, any appeal pending before ITAT or CIT(A) shall be deemed to be withdrawn from the date of issue of certificate by designated authority.
6. Declarant shall withdraw appeal pending before any appellate forum or writ petition before High Court or Supreme Court and furnish proof along with declaration.
7. Declarant shall furnish an undertaking waiving his right to seek or pursue any remedy or claim in relation to tax arrears otherwise available under any law.
8. Any amount paid under this scheme shall not be refunded in any circumstances.
9. If the amount paid by taxpayer before filing declaration exceeds the amount payable under the scheme, the taxpayer would be granted the refund of such excess amount.
Now assessee is required to take decision whether to take benefit of this scheme or not. Decision may be affected by factors like probability to win or lose the case, future cost of appeal, time and energy involved in resolving the case, etc.