A bill has been introduced by the Indian government highlighting details about the Direct Tax dispute settlement scheme. Known as The Direct Tax ‘Vivad se Vishwas Bill, 2020’ for dispute resolution to direct taxes, it proposes the idea of levying less or discounted payment from a taxpayer, if he/she settles all disputes before the end of this particular financial year, i.e. FY 2019-20, under this scheme.
Financial experts from EY said on this matter that it was a long-awaited measure that will surely bring finality to litigation cases that have been pending for long.
Latest Update on Vivad Se Vishwas Scheme
- The government has given a deadline of 31st October 2023, for submitting the claim under a scheme called “Vivad se Vishwas – II (Contractual Disputes)”. This is a one-time settlement scheme which helps taxpayers to resolve legal tax disputes between parties. Read More
Income Tax Authorities Contacting Assessees for Vivad Se Vishwas Scheme
All over the country, the disputes between the IT council and individuals as well as corporations need to be solved by the Income-Tax (I-T) officials through the Centre’s flagship Vivad Se Vishwas Scheme (VSVS) before the end of the month. To avail of the scheme the officials are alerting the individuals and corporations by calling, giving emails, and sending letters to settle the direct tax disputes with the council. “Reaching out to key litigants and our counterparts where we are in litigation is the key strategy for us so that they can pay up 50 per cent and withdraw”.
Who can be a Part of the Tax Dispute Settlement Scheme?
According to the Vivad se Vishwas bill, this scheme will apply to taxpayers who have filed appeals for resolving disputed tax, interest or penalty matters with the Income-tax Appellate Tribunal, the Commissioner (Appeals), High Court or Supreme Court as on the 31st day of January 2020. It doesn’t matter whether the tax demand is such cases are pending or have been paid.
Read Also: Easy Guide to TDS Provisions Under Income Tax Act 1961
What is the Meaning of Tax Arrears in Tax Dispute Scheme
As per the bill Vivad se Vishwas, the “tax arrears” is the total aggregate amount of disputed tax, penalty implied on such disputed tax and interest chargeable or charged on such disputed tax, then such amount has to be paid to the government by taxpayers before 31st January 2021.
Those taxpayers who avail of this scheme on or after 1st April 2020 have to pay an additional 10% of the total disputed tax. However, if such an additional 10% amount is higher than the aggregate amount of interest and penalty chargeable or charged on disputed tax, then the excess amount will be simply ignored for the purpose of calculation.
In Case The Dispute is Related to Interest or Penalty Amount
A taxpayer is required to pay 25 per cent of the disputed interest penalty or disputed fee before 30th June 2020, if the dispute has arisen with the income tax department related to the disputed income, penalty or fee.
Taxpayers availing the benefit of this scheme or after 1st April 2020 would be required to pay 30 per cent of the disputed penalty disputed fee or disputed interest to the tax authority.
How the Tax Dispute Settlement Scheme (Vivad se Vishwas) Will Work
As per the bill related to the scheme, the designated authority will declare the total amount payable by the declarant or taxpayer within 15 days, starting from the date of receiving receipt of the declaration under this Act. This declared tax amount payable by the taxpayer will be decided by the authority based on provisions of this Act (the scheme). The designated authority will also provide a certificate to the declarant, which will highlight the information amount of ta arrears and total payment amount after such determination.
The taxpayers should also pay the required amount identified by the designated authority within 15 days, starting from receiving the receipt of the certificate, which contains details about such payment to be paid to the designated authority in a prescribed form.
The (Vivad se Vishwas) scheme also highlights the point that once the taxpayers decide to resolve the dispute with the tax authority under this scheme, then the amount payable would be considered final and such cases will not be opened again for proceeding under the Income Tax Act.
The designated authority would not be entitled to impose, apply or levy any penalty or interest under the Income Tax Act concerning tax arrears in this scheme.
Who Cannot be a Part of the Tax Dispute Scheme (Vivad se Vishwas)?
The tax dispute settlement scheme (Vivad se Vishwas) will not be applicable for taxpayers in tax arrears-related disputes as given below:
- The scheme will not be applicable for an assessment year where the assessment has been made under section 153A or section 153C of the IT Act if it is related to any tax arrear.
- For an assessment year where the prosecution has been instituted on or before the date of filing of declaration.
- Any disclosed income from a foreign source outside India or any undisclosed assets outside India.
- For an assessment or reassessment that has been made as per the agreement highlighted in section 90 or section 90A of the Income-tax Act.
- The scheme will not be applicable in cases where the appeal before the Commissioner regarding the notice of enhancement has been made under section 251 of the Income Tax Act.
- The scheme will also not apply to any individual against whom an order of detention has been passed under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 on or before the filing of the declaration.
Withdrawal of Appeal Deemed
In case the designated authorities issue a certificate under Section 5(1) under the IT Act, the appeal pending with the ITAT or the CIT (A) would be deemed as automatically withdrawn.
Withdrawal of Writ
The declarant must file an application regarding the withdrawal of the writ of petition to the High Court or the Supreme Court if the petition is pending with the court regarding tax dues.
Withdrawal of Claim
Wherever each proceeding for arbitration, conciliation or negotiation has been begun or notice thereof has been provided in way of any law or agreement inserted into by India with any other country or territory outside India including for the security of investment, the declarant shall file an application for withdrawal of the claim.
The finance minister of India, Smt. Nirmala Sithraman introduced a new scheme for settling the pending tax-related disputes of the taxpayers. The scheme “THE DIRECT TAX VIVAD SE VISHWAS ACT, 2020”, was announced by the finance minister on 1st February 2020 in the Budget for the financial year 2020-21. “THE DIRECT TAX VIVAD SE VISHWAS ACT, 2020” was introduced along with a circular issued by the Central Board of Direct Taxes (CBDT) viz, ‘Circular No. 7/2020’. The circular contained 55 different questions and answers with detailed explanations about the bill. The circular will help the taxpayers in understanding the complexities of the tax system.
The decision was taken as a step to reduce the number of pending cases:
| Level at | No. of cases pending |
|---|---|
| CIT (Appeals) | 3,41,000 |
| ITATs | 92,205 |
| High Courts | 43,224 |
| Hon’ble Supreme Court | 6,188 |
| Total | 4,82,617 |
A tax amount of approx INR 9 lakh crores is struck in the cases.
Eligibility of the Scheme
The scheme is eligible for the following cases:
- Cases pending as of 31st January 2020 before CIT, Income Tax Appellate Tribunal (ITAT), High Courts or the Supreme Court.
- Cases where orders were passed but the time limit for filing appeals in not expired as of 31st January 2020.
- Cases against Dispute Resolution Panel (DRP)
- Cases where AO has not given any orders.
- Cases pending before Cit under section 264 of the Income Tax Act, 1961
Vivad se Vishwas Bill Scheme Due Dates, Penalty & Benefit
- In case of appeals/writs/SLP filed by the assessee
| Nature of tax arrear | The amount payable on or before 31st March 2020 | The amount payable after 31st March 2020 | The benefit of the Scheme |
| Tax arrears are the aggregate amount of disputed tax, disputed interest or interest charged on disputed tax, and penalty on such disputed tax | 100% of disputed tax (125% in search cases) | 110% of disputed tax (135% in search case) | Complete waiver of disputed interest and disputed penalty which is connected with disputed tax. Complete immunity from future prosecution (like reopening u/s 148) |
| Tax arrears relate to disputed interest disputed penalties or disputed fees | 25% of disputed interest, penalty or fees | 30% of disputed interest, penalty or fees | Waiver of 75% (70% if paid after 31st March 2020) of disputed interest, penalty or fees. Complete immunity from future prosecution (like reopening u/s 148) |
- In case of appeals/writs/SLP filed by the department
| Nature of tax arrear | The amount payable on or before 31st March 2020 | The amount payable after 31st March 2020 | The benefit of the Scheme |
| Tax arrears is the aggregate amount of disputed tax, disputed interest or interest charged on disputed tax, and penalty on such disputed tax | 50% of disputed tax (62.5% in search cases) | 55% of disputed tax (67.5% in search case) | Partial waiver (50% or 45%) of disputed tax and Complete waiver of disputed interest and disputed penalty which is connected with disputed tax |
| Tax arrears relate to disputed interest disputed penalties or disputed fees | 12.5% of disputed interest, penalty or fees | 15% of disputed interest, penalty or fees | Partial waiver (87.5% or 85%) of disputed interest, penalty or fees |
- Following are some cases/classes of taxpayers who are kept outside the purview of this scheme:
| Cases/Class of Taxpayers | Reason for keeping out of the Scheme |
| Search and Seizure cases where demand is more than Rs. 5 crores | These cases are high tax demand cases, the highest amount of tax revenue plugged in this category. the department may not want to lose the possibility of gaining revenue in such high-tune cases. |
| Where the source of income is located outside India or undisclosed assets located outside India. | In the majority of these cases provisions of The Benami Transactions (Prohibition) Amendment Act, of 2016 may be attracted. This scheme does not provide immunity from the said Act. These cases are also high-demand cases. The department has to put a lot of intelligence and resources into identifying such cases. |
| Prosecution initiated but pending for order | Quantification of a disputed amount is not possible. |
Steps to File a Declaration under Vivad se Vishwas Bill
Steps to file a declaration under VSV schemes:
- Login to the I-T portal.
- Click on the Vivad Se Vishwas tab.
- Prepare and Submit the DTVSV Form.
- Select the year and the filing type.
- Fill out Form-1 correctly.
- Fill out Form-2 as a final submission.
- File the required documents properly.
- File them with DSC or EVC accordingly.
- Make the payment within 15 days in Form-3 issued by the I-T Department.
- The order for settlement will be issued by the department.
Conclusion
It is totally the choice of the taxpayer to opt or not the benefits of the scheme. He should make an informed decision. Consider the rules and requirements before going for the scheme. Conduct a cost analysis before going for or dropping the scheme. It can benefit you if you make a wise decision.
Sir we have applied for vivad se vishwas and have not paid the any taxes . Whether we have to appeal to CIT for again or Original appeal will be considered.
Sir I am working as a contractor I lake of knowledge not return filling so I appealed subk vishwas in 2019 I have not. The amount does not pay the taxi I belong to sc community group so I suffering many financial problems. So due to covid 19 effect kindly appeal commissioner any chances kindly help me, sir
Tax determined to settle a case is 50 lacs. if 25 lacs is paid by 31.08.2021 and balance 25 lacs would be paid by 31.10.2021. Is interest @ 10% is chargeable on 25 lacs or 50 lacs? Kindly enlighten
In case the assessee pays taxes, under the Scheme, related to Assessment u/s 148/144 which is pending before CIT (A). Whether IT Dept will withdraw Notice u/s 271(1)(c) and 271(1)(b) already issued but kept in abeyance till disposal of Appeal.
In one of my assessee cases appeal was filed for interest u/s 234A,B,&C which was Rs. 60 lacs as per Asst. order but since there were mistakes 154 application was also filed. The appeal was filed with 60 lacs disputed interest. But subsequently, in Jan 2021 the AO passed 154 orders reducing the interest liability to 20 lacs. We filed VSVS form 1 & 2 with disputed interest at 20 lacs ( as per 154 order) and proposed to pay 25% ie 5 lacs only. Dept says they will process form 3 with 15 lacs payment ( ie 25% of 60 lacs. please enlighten.
Form 3 has been received wherein there is a refund due to me. Now as per the scheme I am to submit Form 4 giving details of payment of tax payable and withdrawal of Appeal with CIT(A).
Since there are no Tax dues, but a refund, what do I do. Secondly, how do I give proof of withdrawal of the appeal, since there is no provision for the same online, in faceless appeal?
Kindly help me in this matter.
Dear Sir,
Please tell me On Which Challan you will paid on Demand Amount of Viivad Se Viswas Act 2020
On reading the notification it seems that the date for passing the order under VsV has been extended from January 30, 2021, to January 31, 2021. The last date for filing the application under VsV was December 31, 2020, and the same has not been extended.
If CIT(A) passed order on 16.01.2020 against the assessee and the dispute is related to tax, interest and penalty. Whether this dispute can be covered in this scheme if yes then, Is their any requirement for filing appeal in ITAT against the order of CIT(A) within 60 Days.
In the scheme, clarity is required to be given if the assessee has made partial payment against disputed tax before or after the filing of appeal either as a condition for the stay or in view of Circular instructions, whether the payment made as such against disputed tax will be given credit for final payment of disputed tax.
If the dispute is related to Interest, fee or penalty amount then the taxpayer is required to pay 25% of the disputed interest or fee or penalty before 31st march 2020 but from 1st April 2020 taxpayer would be required to pay 30% of the disputed interest or fee or penalty.
However, in the other cases taxpayer is required to pay a total of the aggregate amount of disputed tax, penalty implied on such disputed tax and interest chargeable or charged on such disputed tax but the taxpayer who avail this scheme after 31st march will be required to pay additional 10% of the disputed tax.