First introduced in the budget speech of Mrs. Nirmala Sitharaman, our honorable finance minister in her budget speech of budget 2020, where she referred No Dispute but Trust Scheme – ‘Vivad Se Vishwas’ Scheme on 1st February 2020. The reason behind introducing this scheme was the total number of cases pending before CIT(A), ITAT, HC, and SC are more than the number of cases disposed of till now and as on 30th Nov 2019 disputed direct tax amounting Rs. 9.32 lakh crore whereas a total collection of FY 2018-19 was Rs. 11.37 lakh crore.
This scheme is also inspired by Sabka Vishwas – (Legacy Dispute Resolution) Scheme, 2019(SVLDRS) for central excise and service tax arrears and pending disputes through which govt. has successfully collected a handsome amount of central excise and services. However in my opinion after reading and analyzing complete Direct Tax Vivad Se Vishwash Act, 2020, here the situation will be different and it is difficult to convince taxpayer to agree on what demand Assessing Officer (AO) has raised is correct and deposit that disputed tax amount only, as if the matter is pending before the appellate authorities that itself means demand of disputed tax is unjust and unreasonable and why one should be depositing. For many of our clients' matter pending before appellate authorities where demand is totally wrong, why one would suggest anybody deposit an unjust tax amount of demand.
The Government may get many cases settled under this Vivad se Vishwash Scheme, 2020 like cases where a small amount of disputed tax involved, appeal against disputed penalty and appeal against disputed interest may apply for this scheme just to move on and for the peace of mind. However, even in these cases, the cost of fighting appeal and amount may need to be deposited will be the deciding factor.
The Direct Tax Vivad Se Vishwas Bill, 2020 was placed before both the houses of the parliament and then became the Act, that will be called as “Direct Tax Vivad Se Vishwash Act, 2020” with complete sections, definitions, rules and procedures been made
Section 2(1) of the Act provides for definition, here two important definitions are being explained out of them
1. Disputed Tax means as per Section 2(1)(j) tax determined under the Income-tax Act, 1961 in accordance with the following formula;
S.No. | Particulars | Amount |
A | An amount of tax on the total income assessed as per the provisions of | XXXX |
B | An amount of tax that would have been chargeable had the total | XXXX |
C | A-B | XXXX |
|
|
|
D | An amount of tax on the total income assessed as per the provisions | XXXX |
E | An amount of tax that would have been chargeable had the total | XXXX |
F | D-E | XXXX |
| Disputed Tax Amount would be (C+F) | XXXX |
2. Tax Arrears means
(i) the aggregate amount of disputed tax, interest chargeable or charged on such disputed tax, and penalty leviable or levied on such disputed tax; or
(ii) disputed interest; or
(iii) disputed penalty; or
(iv) disputed fee,
as determined under the provisions of the Income-tax Act
Amount Payable under Vivad Se Vishwash Scheme
S.No. | Nature of tax arrear | Amount Before 31st March, 20 | Amount After 31st March, 20 but before the last date |
A | Where Tax Arrear is the aggregate amount of disputed tax, interest chargeable or charged on such disputed tax and penalty leviable or levied on such disputed amount. | Amount of Disputed Tax Only | The Aggregate amount of disputed tax and 10% thereon |
B | Where tax arrear relates to disputed interest or disputed penalty or disputed fee | 25 % of the amount | 30% of the amount |
Process of Filing of Declaration under Vivad se Vishwash Scheme 2020
The declaration shall be filed before designated authority, not below the rank of commissioner of the income tax notified by Principal Chief Commissioner for the purpose of this Act as follows based on where the matter is pending as below;
1. Upon the filing, the declaration, any appeal pending before the Income Tax Appellate Tribunal or Commissioner (Appeals), in respect of the disputed income or disputed interest or disputed penalty or disputed fee and tax arrear shall be deemed to have been withdrawn from the date on which certificate under sub-section (1) of section 5 is issued by the designated authority.
2. Where the declarant has filed an appeal before the appellate forum or any writ petition before the High Court or the Supreme Court against any order in respect of tax arrear, he shall withdraw such appeal or writ petition with the leave of the Court wherever required and furnish proof of such withdrawal along with the declaration.
3. Where the declarant has initiated any proceeding for arbitration, conciliation or mediation, or has given any notice thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India whether for protection of investment or otherwise, he shall withdraw the claim, if any, in such proceedings or notice prior to making the declaration and furnish proof thereof along with the declaration.
In what cases declaration may be rejected and what will be consequences
If the declarant submitted any false particulars, violated any of the conditions referred to in the provisions of this scheme and act in a manner that is not in accordance with the undertaking given. In such a case, all the proceeding claims were withdrawn and all the consequences under the Income-tax Act gainst the declarant shall be deemed to have been revived.
Time and Manner of Processing of Application
The designated authority shall, within a period of fifteen days from the date of receipt of the declaration, by order, determine the amount payable by the declarant in accordance with the provisions of this Act and grant a certificate to the declarant containing particulars of the tax arrear and the amount payable after such determination and Declarant has to pay such amount within 15 days of of the date of receipt of the certificate and intimate the details of such payment to the designated authority.
Who can not apply for this Vivad Se Vishwash Scheme Scheme
1. Matters 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 i.e. search and seizer cases
2. Matters relating to an assessment year in respect of which prosecution has been instituted on or before the date of filing of declaration.
3. Matters relating to any undisclosed income from a source located outside India or an undisclosed asset located outside India
4. Matters 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
5. Matters 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
6. 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
7. any person in respect of whom prosecution for any offense 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 offense punishable under any of those Acts
8. 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
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