News & Blog

Vivad se Vishwas Scheme : Solution to Income Tax Disputes?

News & Blog

Vivad se vishwas scheme

The ‘Vivad se Vishwas’ Scheme was announced during the Union Budget, 2020, to provide for dispute resolution in respect of pending income tax litigation. Pursuant to the Budget announcement, the Direct Tax Vivad se Vishwas Bill, 2020 was introduced in the Lok Sabha on the 5th of February, 2020 and passed by it on the 4th of March, 2020.

The objective of the Vivad se Vishwas Scheme (VSVS): –

The objective of Vivad se Vishwas is to reduce pending income tax litigation with any appellate forum. Taxpayers would be able to end their ongoing tax disputes by withdrawing their appeals. Further, they can also file a declaration form and pay the disputing tax.

As per the Vivad Se Vishwas bill, the taxpayer needs to pay the same amount, as the designated authority has determined in the certificate within 15 days’ span, which starts from the date of receiving the same.

Next, the taxpayer has to intimate the details of this payment to the designated authority in the provided form, and after that, the designated authority must pass an order, which will state that the taxpayer has paid the amount.

Who is eligible to opt for Vivad se Vishwas Scheme?

Vivad se Vishwas Scheme

The scheme will be applicable to all the appeals/petitions filed by taxpayers or the Income Tax Department which are pending before:

  • Commissioner (Appeals),
  • Income Tax Tribunal,
  • High Court (HC) or Supreme Court (SC) and writ petitions pending before High Court or Supreme Court or
  • Special leave petitions before SC

as of 31st January 2020.

Further, this scheme is applicable in the following cases:

  • If the appeal is not pending but the case is pending in Arbitration, then also assessee can opt for settlement under Vivad se Vishwas scheme.
  • Appeal filed against the interest levied on assessed tax where there is no dispute on the amount of assessed tax is also covered under the scheme.
  • In case of Appeals in which assessee has already paid the disputed amount fully or partly, and if the amount of tax paid is more than the amount payable under Vivad se Vishwas scheme, then the assessee is entitled to refund without interest.
  • In the case where the assessment has been made under section 143(3) or 144 or 153A or 153C of the Act on the basis of search initiated under section 132 or section 132A of the Act if the amount of disputed tax is Five crore rupees or less in a year.
  • If an appellate authority has set aside an order for giving a proper opportunity to an assessee on the additions carried out by the AO, the assessee would be eligible to avail Vivad se Vishwas scheme.
  • If the appeal has been filed against imposition of fees under section 234 E and 234 F of the Act, the appellant would be eligible for opting Vivad se Vishwas and the amount payable under the scheme will be 25% or 30% of the disputed fee, as the case may be.
  • The appeal related to delay in deposit of TDS/ TCS and interest thereon will also be covered under Vivad se Vishwas.

Amount Payable by Assesse in Vivad se Vishwas Scheme: –

  • If Appeals/ writ/ SLP/ DRP/ arbitration filed by the Assessee: –

 

S.No. Nature of Disputed Liability In case payment made till 31st March 2020 In case payment made after 31st March 2020
1. Disputed liability is aggregate of disputed tax, interest and penalty levied or leviable 100% of disputed tax, without considering interest and penalty. 110% of disputed tax.
2. Disputed liability is aggregate of disputed tax, interest and penalty levied or leviable in case of Search 125% of disputed tax, without considering interest and penalty. 135% of disputed tax.
3. Disputed liability is aggregate of disputed penalty, interest or fee 25% of disputed penalty, disputed interest or disputed fee 30% of disputed penalty, disputed interest or disputed fee

 

If the appeal is filed before the CIT(A) / ITAT or objection is filed before the DRP, by the appellant, on any issue and the appellant has got a favorable decision for that issue from the higher appellate forum, the amount payable shall be 50 percent of the relevant amount mentioned in the above table.

  • If Appeals/ writ/ SLP filed by Department: –

 

S.No. Nature of Disputed Liability In case payment made till 31st March 2020 In case payment made after 31st March 2020
1. Disputed liability is aggregate of disputed tax, interest and penalty levied or leviable 50% of disputed tax, without considering interest and penalty. 55% of disputed tax.
2. Disputed liability is aggregate of disputed tax, interest and penalty levied or leviable in case of Search 62.50% of disputed tax, without considering interest and penalty. 67.50% of disputed tax.
3. Disputed liability is aggregate of disputed penalty, interest or fee 12.50% of disputed penalty, disputed interest or disputed fee 15% of disputed penalty, disputed interest or disputed fee

Credit for earlier taxes paid against disputed tax will be available against the payment to be made under Vivad se Vishwas, the appellant is required to pay only the remaining amount.

Also Read: Income Tax Return for Individual

Procedure for Payment of Tax under the Scheme: –

 Following is the procedure of payment of tax under the scheme:

  • First Step – Filing of a declaration by the appellant before a designated authority (DA).
  • Second Step – DA will determine the amount payable by the appellant within 15 days from the date of receipt of the declaration and grant a certificate containing the amount of tax arrears as determined.
  • Third Step –  The appellant shall withdraw appeal pending before the appellant forum and pay the amount so determined within 15 days of the receipt of the certificate and then submit proof of withdrawal with an intimation of payment to DA.
  • Final step– The DA shall pass an order stating that the appellant has paid the amount. (DA is instructed to grant a certificate at an early date enabling the appellant to pay the amount on or before 31st March 2020.

Final words

Provisions of the VSVS are intended to benefit the taxpayers, inter alia, providing a one-time settlement for the pending disputes under the Income-tax Act, 1961 on payment of much less amount than what would otherwise have been payable. Those who avail the scheme can also avoid criminal prosecutions on the issues covered.

Leave a Reply

Your email address will not be published. Required fields are marked *

We take processes apart, rethink, rebuild, and deliver them back working smarter than ever before.
Open chat
Powered by