The Tamil Nadu Government has introduced a new Tax Arrears Conciliation Scheme, known as the Samadhan Scheme, to facilitate the resolution of pending tax dues amounting to approximately Rs. 25,000 crore. The majority of these dues are related to the previous Tamil Nadu Value Added Tax (VAT) and other legacy tax legislation.
- This initiative aims to address long-standing issues, appeals, arrears, and disputes between traders and the State Commercial Tax Department.
- The scheme will be effective from October 16, 2023, to February 15, 2024.
Available Payment Methods
(i) Under this scheme, the government has devised different payment options based on the size of the dues for five categories of traders. The categories include:
- Dues below Rs. 50,000
- Dues between Rs. 50,000 and Rs. 10 lakhs
- Dues between Rs. 10 lakhs and Rs. 1 crore
- Dues between Rs. 1 crore and Rs. 10 crore
- Dues above Rs. 10 crore
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(ii) For traders with dues below Rs. 50,000, including taxes, interest, and penalties, a complete waiver is applicable for each assessment year.
- This waiver represents a significant step as it is the first time in Tamil Nadu that small traders’ taxes are fully waived.
- Around 95,502 small traders will benefit from this scheme.
(iii) Traders with dues between Rs. 50,000 and Rs. 10 lakhs are required to pay a flat 20% of their dues in a single move.
- Those who have accepted the tax assessment must pay 66% of their dues, along with 10% interest and 10% penalty.
- Traders with pending appeals or cases can settle them by paying 33% of their dues, along with 10% interest and a 10% penalty.
- If traders have no tax dues but have penalty and interest dues, they can participate in the scheme by paying 10% interest and a 10% penalty.
(iv) The aforementioned payment options also apply to traders with dues in the range of Rs. 10 lakhs to Rs. 1 crore.
- However, they are not eligible for the flat rate of payment.
There is a distinct payment option for traders with dues ranging from Rs. 1 crore to Rs. 10 crore. Depending on their circumstances, traders in this category have the following choices:
- Traders who have accepted the tax assessment can pay 75% of their dues, along with a 15% penalty and 20% interest.
- Traders who have filed an appeal can opt to pay 50% of their dues, along with 20% interest and a 15% penalty.
- If traders have already paid the tax but not the penalty and interest, they can settle by paying a 15% penalty and 20% interest.
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(vi) For traders with dues exceeding Rs. 10 crores, the payment requirements differ as follows:
- Traders who have accepted the tax assessment must pay 90% of their dues, along with a 15% penalty and 30% interest.
- Traders who have filed an appeal or initiated legal cases can settle by paying 60% of their dues, along with a 15% penalty and 30% interest.
- Traders with no tax dues but penalty and interest dues are only required to pay 30% interest and a 15% penalty.
Key Points to Remember:
- In the last three categories, traders can pay the specified portion of the tax, interest, and fines and end their obligations.
- Participants in the scheme will have the accrued interest on tax arrears waived until the amount is paid.
- With the implementation of the Goods and Services Tax (GST) on July 1, 2017, several previous tax acts were subsumed under GST. However, tax arrears, interests, and penalties from the previous taxation system remain unresolved.
