VIVAD SE VISHWAS SCHEME, 2020

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Purpose:

Due to the significant rise in number of appeals pending disposal under Income Tax, which is burdensome on the Government preventing them from timely collection of revenue as well as for tax payers who has to spend time and resources on such appeals, the Finance Minister in her recent Budget has proposed “The Direct Tax Vivad Se Vishwas (DTVV) Bill, 2020” thereby providing an option for fast track resolution of tax disputes.

Applicability of this Scheme:

a) This Scheme shall be applicable for all pending appeals before Commissioner (Appeals), Appellate Tribunal, High Court or Supreme Court as on 31-01-2020 irrespective of whether the demand is pending or paid.
b) This Scheme covers:

  • Disputed Income Tax plus Interest and Penalty
  • Disputed Interest (where there is no Disputed tax)
  • Disputed Fees (where there is no Disputed tax)
  • Disputed penalty (where there is no Disputed tax)
  • Disputed TDS/TCS defaults

Non-Applicability of the Scheme

a) Tax Arrears assessed relating to

  • Sec 153A of the Income Tax Act – Search or Requisition
  • Sec 153C of the Income Tax Act– Search or Requisition on Income of any other person
  • Any Prosecution instituted on or before date of filing declaration under Sec 4 of the DTVV Bill for the respective Assessment Year
  • Undisclosed Income/Asset outside India
  • Assessment/reassessment based on Agreement referred in Sec 90 or 90A of the Income Tax Act
  • Relating to appeals before CIT(A) for which notice of enhancement issued under Sec 251 of the Income Tax Act on or before 31-01-2020.

b) Any person to whom order of detention has been made under provisions of Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, on or before date of declaration under Sec 4 of DTVV Bill.
c) Any Person to whom prosecution for any offence punishable under the following laws has been instituted on or before date of declaration under Sec 4 of DTVV Bill and has been convicted of such offence:

    • Indian Penal Code
    • Unlawful Activities (Prevention) Act, 1967
    • Narcotics Drugs and Psychotropic Substances Act, 1985
    • Prevention of Corruption Act, 1988
    • The Prevention of Money Laundering Act, 2002
    • Prohibition of Benami Property Transactions Act, 1988

d) Any person notified under Sec 3 of Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 on or before date of filing declaration.Declaration and Certificate of Tax Arrears and its effect on pending appeals

Declaration and Certificate of Tax Arrears and its effect on pending appeals

The Declarant (taxpayer) should file before the Designated authority (an officer ranking above Commissioner and as notified by Principal Chief Commissioner) a Declaration providing the details of Tax arrears (i.e. Tax + Interest + Penalty) as determined under Income tax provisions, along with an Undertaking for Waving the taxpayers right to seek or pursue any remedy to the tax Arrear declared under any law.
Once the declaration is filed, the Designated Authority shall issue a Certificate to the Declarant within 15 days from date of receipt of such declaration. The Certificate shall mention the amount of tax arrears and the amount payable by the Declarant.
W.e.f the date of the Certificate as mentioned above, all appeals pending before the ITAT, CIT(A) for the respective Assessment years for which declaration is filed shall be deemed withdrawn.
For any of the Appeals/Proceedings for Arbitration or Conciliation/Writs pending before the High Court, Supreme Court or Appellate Forum, the Declarant shall himself file for withdrawal of the same and submit the proof of withdrawal along with the Declaration form.

Determination of Tax Payable and Time limit for Payment

Having said that, Sec 5(2) of the Scheme states that, the payment as determined in the Certificate issued by the Designated Authority shall be made on or before 15 days from date of receipt of such certificate. So, there is some further clarification required on this matter. The amounts a paid as above is not refundable.

Immunity from further proceedings

On intimation of payment as per Certificate issued by the Designated Authority, they shall pass an order stating that the Declarant has paid the amount. This order is conclusive ie no further proceeding shall be done for the respective Assessment year under the Income Tax Act or any other law with regard to the disputed amounts. However, no immunity shall be granted for the tax, interest or penalty not declared.

Grounds for Rejection of Declaration

a) Furnishing of False particulars in declaration fount at any stage
b) Declarant violates any of the conditions of this scheme
c) Declarant acts not in accordance with the Undertaking of Waiver
 

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