Vivad se Vishwas Scheme 2020

The pending litigation at the various stage is one of the biggest concern under direct taxes regime. Reports say that there are around 4,83,000 direct tax cases pending against various appellate forum, which involves a whopping amount of around INR 9 Lakh Crores of direct taxes. To clear up many of the pending litigation and recover the taxes, the Government has recently introduced the Direct Tax Vivad Se Vishwas Scheme. It should be noted that the Direct Tax Vivad Se Vishwas Bill, 2020 has been introduced in the Lok Sabha on 5^th February 2020. In the present article, we are covering the Direct Tax Vivad se Vishwas Bill, 2020 and the Direct Tax Vivad se Vishwas Rules, 2020. released by the Gazette can be accessed below. [pdf-embedder url="https://www.indiafilings.com/learn/wp-content/uploads/2020/02/Vivad-se-Vishwas.pdf" title="Direct-Tax-Vivad-se-Vishwas-Rules-2020"]

Applicability of the Scheme

Applicability of the Scheme is explained hereunder: The Scheme applies to all the appeals (both filed by the taxpayer or filed by the Revenue Authorities) which is pending before any of the following forums as on 31^st January 2020:

CIT (A) i.e. the Commissioner of Income Tax (Appeals); or
ITAT i.e. the Income Tax Appellate Tribunals; or
The Hight Courts; or
The Supreme Courts.

Non-applicability of the Scheme is explained hereunder: The provisions of the Scheme shall not apply under the following cases:

In respect of tax arrears

In respect of a person

In case, assessment has been made under section 153A or section 153C of the Income Tax Act.

Prosecution has been instituted on or before the date of filing of the declaration.
Undisclosed assets located outside India or undisclosed income from a source located outside India.
Assessment/ re-assessment made based on information received under an agreement referred under section 90 or section 90A.
Appeal before the Commissioner (A) where notice of enhancement under section 251 has already been issued.

Where already an order of detention has been made as per provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act 1974. Where prosecution has been initiated for any offence punishable under any of the following law: 1. The Unlawful Activities (Prevention) Act. 2. The Indian Penal Code. 3. The Prevention of Money Laundering Act. 4. The Narcotic Drugs and Psychotropic Substances Act. 5. The Prohibition of Benami Property Transactions Act. 6. The Prevention of Corruption Act. The person already notified under section 3 of the Special Court (Trial of offences Relating to Transactions in Securities) Act.

An amount payable by the declarant under the Scheme

S. No.	Nature of tax arrears	Amount Payable
S. No.	Nature of tax arrears	On or before 31^st March 2020	On or after 1^st April 2020 but before the last date
1	Tax Arrear = Disputed tax + disputed interest + disputed penalty	The entire amount of the disputed tax	110% of the entire amount of the disputed tax
2	Tax Arrear = disputed interest or disputed penalty or disputed fee	25% of the disputed interest or disputed penalty or disputed fee	30% of the disputed interest or disputed penalty or disputed fee

Important terms from the above table are explained hereunder:

Tax Arrear

Tax arrear means the following:

The total amount of disputed tax + interest charged or chargeable + penalty levied or leviable; or
Disputed interest; or
Disputed penalty; or
Disputed fee.

Disputed tax

Disputed tax means tax calculated as per following below formula: Disputed tax = (A – B) + (C – D) Where A = Amount of tax on the total income assessed as per normal provisions of Income Tax (other than provisions of MAT and AMT) B = Amount of tax on the total income assessed as per normal provisions of Income Tax reduced by income in respect of which appeal has been filed by the declarant. C = Amount of tax on the total income assessed as per MAT and AMT provisions. D = Amount of tax on the total income assessed as per MAT and AMT provisions reduced by income in respect of which appeal has been filed by the declarant.

Procedure for filing of the declaration under the Scheme

The declarant is required to file a declaration. Such declaration is to be filed before the designated authority (i.e. before officer not below the rank of Commissioner of Income Tax).
In case the declarant has filed an appeal or writ petition before the High Court or Supreme Court, the declarant is required to withdraw such appeal or writ petition with leave of court. The declarant is required to submit the proof of withdrawal along with the declaration.
In case the declarant has begun any proceedings for conciliation, arbitration or mediation or the declarant has given notice under any law or under any agreement entered between India or any other country for protection of investment or otherwise. The declarant is required to first withdraw the claim in such proceedings or notice before submitting the declaration under the Scheme. The declarant is required to submit the proof of withdrawal along with the declaration.
On receipt of the declaration, the designated authority would determine the amount payable by the declaration.
After determining the amount payable, the designated authority is required to grant a certificate to the declarant within 15 days from the date of receipt of the declaration, providing particulars of tax arrears and the amount payable.
On receipt of the certificate, the declarant is required to pay the amount determined within 15 days from the date of receipt of the certificate. The declarant is required to intimate the details of payment to the designated authority.
On receiving the payment intimation, the designated authority shall pass an order. Such order shall be conclusive, and no matter covered by such order can be reopened in any other proceedings under the Income Tax Act or any other law.

Other important Points

The declaration filed would have the following effect
- Any appeal pending before the Commissioner (Appeals) or the Income Tax Appellate Tribunal shall be deemed to have been withdrawn from the date the certificate has been received from the designated authority.
All the proceedings and claim withdrawn under the Scheme shall be revived under the following circumstances:
- Any material provided in the declaration is found to be false.
- The declarant violates any of the condition referred to under the Act.
- The manner in which declarant acts is not in accordance with the undertaking given under the Act.

The official release of Direct Tax Vivad se Vishwas Bill-2020 can be accessed below:

[pdf-embedder url="https://www.indiafilings.com/learn/wp-content/uploads/2020/02/The-Direct-Tax-Vivad-se-Vishwas-Bill-2020.pdf"]

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