This Blog is written By Mr. Anurag
Trivedi Student of Lloyd Law College, Greater Noida & Miss.
Aakriti Agarwal, Student of Lloyd Law College, Greater Noida.
The government has proposed a direct tax dispute resolution scheme. Its name is 'Brawn to Confidence' scheme. A
bill related to this was brought in Parliament. This bill was first
passed in the Lok Sabha. Then on Friday, the Rajya Sabha
returned this bill after a brief discussion. Being a finance bill, it does not
have to be passed in Rajya Sabha. It deals with the disposal of disputes
related to direct taxes.
The bill proposes that taxpayers may settle their tax disputes
before the last date of March 31, 2020. As tax theft is the common
practice in India it is the government's initiative to give the final chance to
the people with the tax dispute with the income tax department and to collect
tax voluntarily from the people without any fine or persecution under the law.
This bill also aims to reduce the income tax litigations. The government extended
the last date for settling the tax dispute under the vivad se Vishwas scheme
without paying any interest and penalty from 31st of March 2020 to the 30th of
June 2020.
Payment terms
|
Payment
made on or before
|
An
appeal, writ, SLP arbitration relates to disputed tax.
|
An
appeal, writ, SLP, arbitration relates only to disputed penalty or interest
or fee.
|
|
31st March
2020
|
100%
of the disputed tax (125%in search cases)[ waiver of interest & penalty]
|
25%of
the disputed penalty or interest or fee
|
|
End
date (likely to be 30th June 2020)
|
110%
of the disputed tax (135% in search cases)[waiver of interest & penalty]
|
30%of
the disputed penalty or interest or fee
|
Cases eligible under the Scheme
1. Appeal pending for admission by High Court.
2. Even where the assessee does not file any
objection before DRP and is awaiting final order. However, assessee to write in
the declaration that time for filing objections before DRP has not expired.
3. Settlement of TDS liability u/s 201 of the
Income Tax Act.
4. Arbitration, Conciliation, or mediation
proceedings initiated by the declarant.
5. Cases, where total income has been determined by
AAR and appeal against AAR decision, is pending before High Court.
6. Enhancement Notice u/s 251 issued by CIT A.
Disputed Tax to be calculated based on Enhancement notice.
7. The departmental appeal against DRP Order. The
amount payable shall be 50% of the normal amount.
8. Where multiple years are involved in search
cases, each such year in which disputed tax is less than 5 Crores shall get
covered.
9. Prosecution cases can get covered by compounding
the offense.
10. Cases set aside to AO for giving proper
opportunity or to carry out the fresh examination of the issue with a specific
direction shall be covered. In such cases, while filling the declaration form,
the appellant can indicate that concerning the set-aside issues, the appeal is
pending with the Commissioner (Appeals).
11. In cases, where the appeal is set aside on some
issue and other issues, are not in appeal and have attained finality because of
appeal not having been filed, still, a declaration can also be filed in respect
of concluded issues
Cases not eligible under the Scheme
1. Disputes pending before AAR
2. Cases, where income has not been determined by
AAR and consequential order, is yet to be passed by AO
3. Interest Waiver application
4. The settlement of disputed tax will not settle
disputed Fee. Both need to be separately settled
5. Stand-alone settlement of penalty without
settling quantum is not possible
6. Wealth Tax
7. CTT
8. STT
9. Equalization Levy
10.
Writ filed against
section 148 in High Court where income is not determined
11.
The mix of Qualifying
and None qualifying amounts-
If the tax arrears include the tax on issues that are excluded
from the Vivad se Vishwas, such cases are not eligible to file a declaration
under Vivad se Vishwas. There is no provision under Vivad se Vishwas to settle
part of a pending dispute concerning an appeal or writ or SLP for an assessment
year. For one pending appeal, all the issues are required to be settled and if
anyone of the issues make the declaration invalid, no declaration can be filed.
Multiple Appeals for same assessment year
1. Where an assessment has been framed for an
assessment year and then reassessment is done for the same assessment a year
and both assessment and reassessment are in appeal.
2. Where both departments, as well as assessee is
in appeal.
3.
Where the assessee has
filed an appeal on a certain issue but time to file an appeal by the department
has not expired and assessee is not sure whether the department shall file an
appeal or not on issues decided in his favor.
In the above cases, the declarant shall have the following
options:S
1. ettle either of appeals/issues or
2. Settle both the appeals/issues
Consequential Reliefs for TDS Settlements
1. Disallowance u/s 40 (a) (i) in order u/s 143(3)
shall get waived where assessee settles TDS issue u/s 201 under the Scheme.
Where matter relating to ordering u/s 201 has already been finally decided in
favor of assessee, still, 40(a)(i) disallowance shall get waived. If other
issues are also involved in order u/s 143(3) and the assessee wishes to settle
order u/s 143(3) then disputed tax in respect of 40(a)(i) may be taken as NIL
2. Deductee to be allowed a credit of TDS liability
settled by the deductor.W
3. here deductee settles his income dispute and tax
was deductible on such income then deductor shall also get relief from
liability to deduct tax. However, he would be required to pay the interest
under sub-section (IA) of section 201 of the Act. If such a levy of interest
under sub-section (IA) of section 201 qualifies for Vivad se Vishwas, the
deductor in default can settle this dispute at 25% or 30% of the disputed
interest
Concessions/Credits
1. Where DRP confirms addition on the matter
already decided in favor of assessee. The amounts payable shall be reduced to
50% of the normal amount
2. Where department is in an appeal against matter
decided by High Court and SC has already decided the issue in favor of
assessee, the amount payable on such issue shall be NIL
3. The credit of amount already paid towards demand
and prepaid taxes shall be allowed
Inconvenient Clarifications
1. No Interest for a refund on account of 40(a)(i)
disputed tax getting waived due to settlement of TDS issues u/s 201.
2. No Interest u/s 244A on excess a deposit against
demand under this Scheme.T
3. he order of the Designated Authority is not
appealable.
4. Interest to be paid by the deductee till the
date of settlement on credit obtained due to the TDS dispute settled by the
deductor.
5. This is against the spirit of section 205 and
clarification issued by CBDT that no recovery can be made from deductee for tax
deducted by the deductor
Withdrawal of Appeal
1. Withdrawal of appeal to make only after issuing
of Certificate by Designated Authority.
2. Proof of request for withdrawal of an appeal to
be provided to the Designated Authority.
3. Department to withdraw appeal/writ/SLP on
intimation of payment to Designated Authority by the appellant.
Rectifications
1. Disputed Tax to be calculated after giving
effect to rectification u/s 154
2. Designated Authority has been empowered to
rectify its order
3. Where a substantive assessment is settled, AO
shall delete protective assessment by rectification order
Other Important Issues
1. One Declaration to be filed for each assessment
year. For different assessment years different declarations to be filed.
2. The designated authority shall be instructed to
grant a certificate at an early date enabling the appellant to pay the amount
on or before 31st March 2020 so that he can take benefit of reduced payment to
settle the dispute.
3. Declarant should apply for a waiver of Interest
u/s 220 even if it is not charged.
4. If both quantum and penalty appeals are pending
then the detail of both appeals to be provided in the declaration form though
disputed tax to be paid for quantum appeal only.
5. Designated Authority shall mention in his order
that Designated Authority shall not institute any proceeding in respect of an
offense; or impose or levy any penalty; or charge any interest under the
Income-tax Act in respect of tax arrears.
6. Making the Declaration does not tantamount to
conceding tax position.
7. Picking and choosing issues for settlement of an
appeal is not allowed. Concerning one order, the appellant must choose to
settle all issues, and then only he would be eligible to file a declaration.
Conclusion
The scheme is the government's initiative to reduce disputes and
also collect the revenues clogged in long-pending litigations. All these steps
also show the eagerness of the government in reaching out to the taxpayer to
enable settlement of long pending disputes. The Central Board of Direct Taxes
(CBDT) has already started advertising the scheme in leading newspapers and
also internally directed all revenue officers to take appropriate steps to
ensure that taxpayers take the benefit available under the scheme and settle
the disputes. It is also beneficial for the MSME sector because about 6 lakh
crore rupees to government and private companies are owned by MSME and because
of this scheme it may be good for our economy.
Bibliography
1. https://taxguru.in/income-tax/summary-clarifications-issued-faq-vivad-se-vishwas-tak-scheme.html
2. https://economictimes.indiatimes.com/wealth/tax/vivad-se-vishwas-scheme-how-individuals-can-settle-their-income-tax-disputes/articleshow/74545720.cms
3. https://economictimes.indiatimes.com/hindi/wealth/tax/know-everything-about-vivad-se-vishwas-scheme/articleshow/74489895.cms?from=mdr
4. https://economictimes.indiatimes.com/wealth/tax/vivad-se-vishwas-scheme-how-individuals-can-settle-their-income-tax-disputes/articleshow/74545720.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst\
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