Direct Tax Vivad Se Vishwas Scheme

The Direct Tax Vivad Se Vishwas Act, 2020, after a number of clarifications and modifications, was passed on 17th March, 2020. This Act brought in Vivad Se Vishwas Scheme which aims at minimizing the number of income tax litigations by allowing the assessees to settle their income tax disputes by paying the disputed tax amounts and waiving off interest and penalties.

Objectives of the Scheme

  • To significantly reduce the number of pending income tax litigations before the CIT(A), ITAT, High Court and Supreme Court
  • To generate timely revenues for the Government
  • To help taxpayers end their income tax disputes by paying the amount of disputed tax and getting waiver of interest penalty as well as immunity from prosecution.

Features of the Scheme

  • Where payment in relation to disputed tax is made within time, the amount of penalty and interest shall be waived.
  • Any amount paid in pursuance of a declaration filed under this scheme shall not be refundable under any circumstances.
  • The applicant has to file an undertaking waiving his right to seek/ pursue any remedy or claim in relation to the tax arrears which may otherwise be available to him.
  • The applicant shall get immunity in respect of any offence in relation to which declaration is filed. There is however no immunity in relation to proceedings other than those in respect of which declaration has been made.

Eligibility

  1. Appeal/ Writ Petition/ Special Leave Petition filed by the assessee/ Income Tax Department is pending as on 31st January, 2020
  2. Order against which no appeal/ petition filed as on 31st January, 2020, but time limit of appeal / petition has not expired
  3. Case pending before DRP as on 31st January, 2020
  4. Case where DRP issued direction u/s 144C(5) but Order u/s 144C(13) not passed by AO until 31st January, 2020
  5. Revision Application u/s 264 pending before the CIT as on 31st January, 2020.

Cases not eligible

  1. Search cases where disputed tax in a year exceeds Rs. 5 crores
  2. Prosecution cases initiated by the Income Tax Department
  3. Cases involving undisclosed foreign income/ assets
  4. Cases completed on the basis of information received from foreign jurisdiction
  5. Cases involving persons detained under the provisions of Conservation of Foreign Exchange and Prevention of Smuggling Activities Act.
  6. Cases involving prosecution under Indian Penal Code (IPC)
  7. Cases involving a person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992.
  8. Cases covered under the following Acts:

Unlawful Activities (Prevention) Act, 1967

Narcotics, Drugs and Psychotropic Substances Act, 1985

Prevention of Corruption Act, 1988

Prevention of Money Laundering Act, 2002

Prohibition of Benami Property Transactions Act, 1988

 

Procedure

The declaration can be filed online by logging into the Income Tax portal. Under the Vivad Se Vishwas tab, the Assessment Year and the Form Type (Original / Revised) has to be selected. After clicking on “Continue” the form will appear. The relevant details are to be filled and submitted.

If payment is made before 31st December, 2020 the following amount needs to be paid:

  1. Where payment relates to appeal/ writ/ SLP (other than search cases): 100% of disputed tax
  2. Where appeal/ writ/ SLP is in relation to search cases: 125% of disputed tax
  3. Where the disputed amount is only in relation to interest/ penalty: 25% of the disputed amount.
  4. Where in the above cases, the applicant has already got a decision in his favour in an appeal etc.: 50% of the above amounts.

No. An applicant who goes for this scheme must file an undertaking waiving his right to seek/ pursue any remedy or claim in relation to the tax arrears which may be otherwise be available to him.

The last date of payment without attracting any additional amount is 31st December, 2020. Earlier the due date was 31st March, 2020 but this date has been extended due to the ongoing COVID 19 pandemic.

Within 15 days from the date of filing the declaration, a certificate will be issued to the declarant from the designated authority. The declarant must make the payment within 15 days from the date of receipt of the certificate.

An assessee whose case is pending in arbitration is eligible to apply under this scheme even if no appeal is pending. In such case, the disputed tax shall be the amount of tax, surcharge and cess on the disputed income with reference to which arbitration has been filed.

Vivad Se Vishwas scheme is not available for disputes pending before the AAR. However, if the order passed by the AAR has determined the total income of an assessment year and a writ against such order is pending in High Court, then the appellant would be eligible to apply under this scheme.

Cases where the assessment has been made on the basis of search, are eligible under this scheme only if the amount of disputed tax in the assessment year does not exceed Rs. 5 crores.

In such a case the assessee will not be eligible to apply under this scheme as there is no determination of income against the said notice.

No. Picking and choosing issues for settlement of an appeal is not allowed. With respect to one order, the appellant must choose to settle all issues.

Under the VSV Scheme, interest and penalty shall be waived only in respect of those issues which are disputed in appeal and for which declaration is filed. Hence in respect of the undisputed issues in the assessment order, interest and penalty shall apply.

If appellant has both appeal against assessment order and appeal against penalty relating to same assessment pending for the same assessment year, and he wishes to settle the appeal against assessment order (with penalty appeal automatically covered), he is required to indicate both appeals in one declaration form for that year.

What’s Included

  • Consultation with our Tax Expert
  • Filing of Declaration in Form 1
  • Filing of Undertaking in Form 2
  • Obtaining Certificate

Documents required

  • Copy of PAN
  • Details relating to the case
  • Copy of Order
  • Copy of Appeal/ Writ/ SLP, if any

Vivad Se Vishwas Scheme


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