How to minimize tax-related litigation through Vivaad Se Vishwas Scheme


Looking for the salient features of the Vivaad Se Vishwas Scheme? Want to know how to settle your tax disputes without any hassles? Learn from this article the general details of the Vivaad Se Vishwas Scheme, including the payment terms, and how it may help taxpayers to avail of immunity from a proceeding for prosecution as well as its other benefits.

The Income Tax Department, Central Board of Direct Taxes, Government of India initiated a scheme for minimizing tax-related litigation. Named 'Vivaad Se Vishwas Scheme' (vivaad means a dispute and vishwas means trust), the goal is to bridge the dispute-trust divide by settling your Income Tax disputes. The scheme is as announced by the Union Finance Minister Nirmala Sitharaman during this year's Budget speech in the Parliament, It has been approved by the Union Cabinet about ten days ago with some amendments, such as including those cases that are pending litigation in a Debt Recovery Tribunal (DRT). The important date to avail of the scheme's features is 31st March 2020. After this date, you will have to pay some additional amount.

Vivaad se Vishwas scheme for tax payers
[Image source: print advt. in Hindustan Times, Mumbai edition, 22nd February 2020.]

Disputes covered under the Vivaad Se Vishwas Scheme

The scheme covers all disputes at all levels, including at the level of Commissioner (Appeals), those placed in front of Income Tax Appellate Tribunals (ITAT), those in High Courts, and in the Supreme Court, in relation to the following-
(1) Disputed tax.
(2) Disputed penalty.
(3) Disputed interest.
(4) Disputed fee.
(5) Disputed tax deducted at source (TDS) or tax collected at source (TCS).



You can avail of this scheme for all appeals/writs filed on or before 31st January 2020 and pending, as also for the following-
  1. The orders for which time for filing the appeal has not expired as on 31st January 2020.

  2. The cases that are pending before the Dispute Resolution Panel (DRP) on 31st January 2020.

  3. The cases where there is a DRP-issued Direction on or before 31st January 2020, but no order has been passed on those cases.

  4. The cases where the assessee filed a revision (Section 264) on or before 31st January 2020.

  5. The search cases if the disputed tax is less than Rs.5 crore in a year.

  6. The appeals/writes filed by taxpayers or the Department of Income Tax.

  7. The disputes where the payment has already been made.

  8. The cases which are in arbitration in India or abroad.

Exclusions include cases where you have not disclosed your foreign income/asset, a search-and-seizure case, etc.



Features and payment terms of the Vivaad Se Vishwas Scheme

For the payment made on or before 31st March 2020: If the appeal relates to disputed tax, then 100% of the disputed tax (125% in search cases) has to be paid. If the appeal relates only to disputed penalty or interest or fee, then 25% of the disputed penalty or interest or fee has to be paid. The penalty and interest will be waived.

For the payment made on or before the end date, namely 30th June 2020: If the appeal relates to disputed tax, then 110% of the disputed tax (135% in search cases) has to be paid, such that it does not increase the total demand. If the appeal relates only to disputed penalty or interest or fee, then 30% of the disputed penalty or interest or fee.

Important notes: In case an issue in your pending appeal is already decided in your favour by the Appellate Forum, or if the Income Tax Department has filed an appeal on the issue, then the amount payable is 50% of the aforesaid amount. Secondly, as a taxpayer availing of this scheme, you must submit documentary proof of the withdrawal of appeal or the writ as the case may be, along with proof of the intimation of payment.



Conclusion

Before rushing to avail of the Vivaad Se Vishwas Scheme, it is advisable to take the advice of financial experts on whether or not it will really benefit you as a taxpayer. You need to consider both sides of the coin. On the one hand, penalty proceedings may be dropped altogether and you get immunity from a proceeding for prosecution. On the other hand, this may not turn out to be the case and you merely end up paying a large fee towards litigation expenses during the appeal's proceedings. Moreover, it should be noted that the filing of declaration under this scheme for one proceeding does not imply that it becomes a precedent for other proceedings.

Relevant websites of the Income Tax Department, Govt. of India:
https://www.incometaxindiaefiling.gov.in/home.
www.incometaxindia.gov.in.


Article by Vandana
Vandana is based in India with over 15 years experience as a freelance writer. Writing, no doubt, is her primary passion! Having learned the art of blogging from ISC, Vandana is enjoying the thrills of blogging, taking pleasure in sharing information & getting good pageviews at her various blogs.

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