The Finance Minister, Smt. Nirmala
Sitharaman, in her budget speech, has proposed to bring a scheme similar to the
Sabka Vishwas (Legacy Dispute Resolution)
Scheme, 2019 to reduce the litigation in the direct taxes. This will not
only benefit the exchequer to recover the blocked revenue but also the
taxpayers to save time, energy and resources to be spent on unwanted
litigations.
The Finance Minister has introduced
the Direct Tax Vivad se Vishwas Bill, 2020 ('the Scheme') in
the Lok Sabha on 05-02-2020 for dispute resolution related to direct taxes. As
per media report, numerous of
changes are made in the bill.
The highlights of the revised bill are discussed in
the below paragraphs:
1)
Who
can avail the benefit under this scheme?
A taxpayer can avail of the
benefit under the scheme in respect of Income-tax appeals pending before the
appellate forum as on 31-01-2020.
These appeals could be filed either by the taxpayer or by the Income-tax authority.
The following person shall also be eligible for the
benefit under this scheme:
a)
A person in whose case
writ/special leave petition is pending before the High Court or the Supreme
Court.
b) A person in whose case, an
order has been passed by the Assessing Officer or appellate forum and time
limit for filing an appeal against such order has not expired on or before
31-01-2020.
c) A person who has filed an
objection with the Dispute Resolution Panel (DRP) under section 144C and no
direction has been issued by DRP on or before 31-01-2020.
d) A person against whom
directions have been issued by DRP on or before 31-01-2020 but the Assessing Officer has not yet
passed an assessment order in pursuance of such
directions.
e) A person who has filed an
application for revision under section 264 and such application is pending on
or before 31-01-2020.
2)
How
much tax is payable under the scheme?
The scheme provides two schedules for the payment of
taxes:
Type
of case
|
Amount payable up to
31-03-2020
|
Amount payable on or
after 01-04- 2020
|
|
|
|
Cases relating to disputed tax, interest
chargeable and penalty on such disputed tax
|
||
If
an appeal is filed by a taxpayer, in whose case
search and seizure have occurred, and the disputed tax does not exceed
Rs. 5 crores.
|
Amount of disputed tax plus 25% of disputed tax.
|
Amount of disputed tax plus 35% of disputed tax
|
If an appeal is filed by a taxpayer, in
any other case.
|
Amount of disputed tax.
|
Amount of disputed tax plus
|
|
|
10%
of disputed
tax
|
If
an appeal is filed by the department, in cases where search and seizure have occurred, and the disputed tax
does not exceed Rs. 5 crores.
|
50%
of disputed tax plus 12.5% of
disputed tax
|
50%
of disputed tax plus 17.5% of
disputed tax
|
If
an appeal is filed by the department, in any other case.
|
50%
of disputed tax
|
50%
of disputed tax plus 5% of disputed
tax
|
Note: Where 25% or 35% or 17.5% or
12.5% or 10% or 5% of disputed tax, as the case may be, exceeds the total of
interest and penalty, such excess amount shall be ignored.
|
||
Cases relating to disputed interest,
penalty and disputed fee
|
||
If an appeal is filed by the taxpayer
|
25%
of disputed interest, penalty or fee
|
30%
of disputed interest, penalty or fee
|
If an appeal is filed by the department
|
12.5%
of disputed interest, penalty or fee
|
15%
of disputed interest, penalty or fee
|
3)
What
is disputed tax or interest or penalty?
A.
'Disputed
Tax' in relation to an assessment
year shall have the following meanings:
Nature
of case
|
Disputed
Tax
|
|
|
Where
appeal, writ petition or special leave petition is pending before the appellate
forum on or before 31-01-2020
|
Amount
of tax (including surcharge and cess but excluding interest) payable if such
appeal was to be decided against taxpayer
|
Where
appeal, the writ petition has been passed on or before 31-01-2020 and time
limit for filing appeal against such order has not expired
|
Amount
of tax (including surcharge and cess but
excluding interest) payable by the taxpayer after giving effect to such order
|
Where objections are pending before the
DRP
|
Amount
of tax (including surcharge and cess but
excluding interest) payable by the taxpayer if DRP was to confirm variation
proposed in the draft order
|
Where
DRP issued directions but the Assessing Officer didn't pass an order on or
before 31-01-2020
|
Amount
of tax (including surcharge and cess but excluding interest) would have been
payable by taxpayer had the order been passed by the Assessing Officer.
|
Where
an application for revision under section 264 filed by the taxpayer is
pending
|
Amount
of tax (including surcharge and cess but
excluding interest) payable by the taxpayer if the application was to be
rejected
|
Where
CIT(A) has issued an enhancement notice under section 251
|
Amount
of tax (including surcharge and cess but
excluding interest) payable by the taxpayer in respect of enhancement
proposed in additions to amount payable relating to the disputed issue.
|
In
cases where disputed tax is related to reduction of MAT/AMT credit or loss or
depreciation, the taxpayer has an option either to include amount of tax
(including surcharge and cess but excluding interest) related to loss in
amount of disputed tax or carry forward the reduced MAT/AMT credit or loss or
depreciation, in a manner to be prescribed.
|
B.
'Disputed interest' means any interest determined under the
provisions of the Act (not being an
interest charged or chargeable on disputed tax) against which appeal has been
filed and pending before the appellate forum.
C.
'Disputed penalty' means any penalty determined under the
provisions of the Act (not being a penalty levied or leviable on disputed
income or disputed tax) against which appeal has been filed and pending before
the appellate forum.
D.
'Disputed fee' any fee which is determined as per the
provisions of the Act against which appeal
has been filed and pending before the appellate forum.
4)
How to
file the declaration under the scheme?
Declaration under the
scheme shall be filed before the designated authority. The relevant form for filing of such declaration shall be notified
subsequently.
Upon receiving the declaration, the designated
authority shall determine the amount payable by the taxpayer and grant a
certificate within 15 days from the date of receipt of the declaration.
5)
When
the disputed amount has to be paid under the scheme?
The taxpayer shall be
required to pay the determined amount within 15 days from the date of receipt
of the certificate and also required to intimate the same to the designated
authority in the prescribed form. In case the taxpayer has already made payment
before filing of declaration, the excess amount paid by him shall be refunded.
However, no interest shall be granted under provisions of section 244A.
In case a taxpayer has filed an appeal
or petition before the appellate forum, he is required to withdraw such
appeal/petition and furnish proof of such withdrawal along with the
intimation of payment. The taxpayer also
needs to withdraw the proceedings, if any, initiated
by him for arbitration, conciliation or mediation. He is further required to
furnish an undertaking waiving his right, whether direct or indirect, to seek
or pursue any remedy or any claim in relation to the tax arrears. Upon receipt
of such intimation, the designated authority shall pass an appropriate order.
6)
Filing
declaration does not amount to conceding tax position
It will be clarified in the
bill that where any tax dispute has been settled under this scheme, it shall
not be lawful to contend that the Income-tax authority or declarant has agreed
in the decision on the disputed issue by settling it under this scheme.
7)
What
shall be the effect of the scheme on pending appeals?
Once taxpayer files
declaration under the scheme, any appeal pending before the ITAT or CIT(A),
in respect of the disputed income/disputed interest/disputed penalty/disputed
fee, shall be deemed to have been withdrawn from the date on which certificate
is issued by the designated authority.
No appellate forum or arbitrator,
conciliator or mediator shall proceed to decide any issue relating to the tax
arrears mentioned in the declaration in respect of which an order has been
passed by the designated authority or the payment of a sum by the declarant has
been made under the scheme.
The declaration made under
the scheme shall be presumed not to have been made in the following
circumstances:
a) If any material particulars furnished in
the declaration is found to be false at any stage;
b) Taxpayer violates any of the conditions referred to
in the scheme; or
c) Taxpayer acts in any
manner which is not in accordance with the undertaking given by him while
filing his declaration.
Once the declaration is
presumed not to have been made, all the proceedings and claims which were
withdrawn earlier shall be deemed to have been revived.
8)
When
the benefit of the scheme is not available?
This scheme shall not be available in respect of the
following circumstances:
a) Tax arrears relating to an
assessment year in respect of which an assessment has been made under section
153A or section 153C of the Act (assessment in case of search or seizure). However, the cases, where
disputed tax does not exceed Rs. 5 crores, shall be eligible for the benefit of
this scheme.
b) Tax arrears relating to an
assessment year in respect of which prosecution has been instituted on or
before the date of filing of the declaration;
c) Tax arrears relating to any
undisclosed income from a source located outside India or an undisclosed asset located outside
India;
d) Tax arrears relating to
assessment or reassessment made on the basis of information received under an
agreement referred to in section 90 or section 90A of the Act;
e) Any person in respect of
whom an order of detention has been made under the provisions of the
Conservation of Foreign Exchange and Prevention of Smuggling Activities Act,
1974 on or before the filing of declaration. However, if such detention order
has been revoked by the Advisory Board or set aside by a court of competent
jurisdiction then such a person can file a declaration under the scheme;
f) Any person in respect of
whom prosecution for any offence punishable under the following Acts or such person has been convicted of any such offence:
■
The
Indian Penal Code (IPC),
■
The
Unlawful Activities (Prevention) Act, 1967,
■
The
Narcotic Drugs and Psychotropic Substances Act, 1985,
■
The
Prevention of Corruption Act, 1988,
■
The
Prevention of Money Laundering Act, 2002,
■
The
Prohibition of Benami Property Transactions Act, 1988
g) Any person against whom enforcement
of any civil liability has been instituted on or before the filing of the
declaration; or
h) Any person notified under
section 3 of the Special Court (Trial of Offences Relating to Transactions in
Securities) Act, 1992 on or before the filing of declaration.
It must be noted that only those cases shall be
excluded from this scheme where department has launched prosecution under IPC
or for enforcement of any civil liability.
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