Launched in: Budget 2020-21

New feature: This scheme is extension to Sabka Vishvas scheme(launched in 2019), which was aimed for indirect taxes. In this scheme, direct taxes are covered, and scope is widened to cover litigation pending in various Debt Recovery Tribunals (DRTs)

Objective of Direct Tax Vivad se Vishwas tak Scheme

The scheme aims to benefit taxpayers whose tax demands are locked in dispute in multiple forums.

The Bill provides a mechanism for resolution of pending tax disputes related to direct taxes (Income Tax and Corporate Tax) in simple and speedy manner.

The scheme aims to resolve 483,000 direct tax-related disputes pending in various appellate forums.

It includes certain search and seizure cases where the recovery is up to ₹5 crore.

It is applicable to taxpayers whose cases are pending in:

Commissioner (Appeals)

Income Tax Appellate Tribunals (ITATs)

Debt Recovery Tribunals (DRTs)

High Courts and the Supreme Court.

Once a dispute is resolved, the designated authority cannot levy interest or penalty in relation to that dispute

The amount payable by the appellant for resolution of disputes is determined based on whether the dispute relates to payment of tax, or payment of interest, penalty, or fee.

Government is expecting Rs 9 lacs crores tax recovery from Direct Tax Vivad se Vishwas scheme. Thus this scheme is expected to benefits both taxpayers and government.

How can taxpayers avail Direct Tax Vivad se Vishwas tak scheme

In case it is just the interest and the penalty which is in dispute, the taxpayer will have to pay 25% of the disputed amount till March 31, 2020, and subsequently, it will be 30%. If a taxpayer is not able to pay within the March 31 deadline, he gets a further time till June 30, but in that case, he would have to pay 10% more on the tax. In case it is just the interest and the penalty which is in dispute, the taxpayer will have to pay 25% of the disputed amount till March 31, and subsequently, it will be 30%.

Following disputes are not covered in this scheme

where prosecution has been initiated before the declaration is filed

which involve persons who have been convicted or are being prosecuted for offences under certain laws (such as the Indian Penal Code), or for enforcement of civil liabilities,

involving undisclosed foreign income or assets

If an appellant provides false information or violates the Income Tax Act, 1961, then case of dispute can be revived

Predecessor of this scheme: Sabka Vishwas Scheme

Highlights of Sabka Vishwas Scheme

Reduces litigation in indirect taxes for year 2019 Resulted in settling over 1,89,000 cases Till Jan 2020, taxes worth Rs 90,000 crores were received

Types of direct taxes in India

Corporate Tax

Minimum Alternative Tax (MAT)

Fringe Benefits Tax (FBT)

Dividend Distribution Tax (DDT)

Securities Transaction Tax (STT)

Income Tax Capital Gains Tax Wealth Tax

End note

In this article, we have given overview of Vivad se Vishwas tak scheme, and how government is aiming to solve litigation problem in tax collection. Please share your feedback and comments in discussion thread below or mail us info@xamnation.com

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