Taxpayers to get refunds beyond disputed amount: Finance secy
NEW DELHI: Aggrieved taxpayers who have already paid tax, plus interest and penalty, under protest will get a full refund of the amount that is in excess of the disputed tax under the proposed amnesty scheme Vivad se Vishwas (dispute to trust), newly appointed finance secretary Ajay Bhushan Pandey said. The refund will include interest and penalty paid by taxpayers.
Pandey said the question was whether a taxpayer who has already paid tax, interest and penalty, and who has appealed against the levy would be entitled to a refund of the amount that exceeds the amount in dispute if he or she opts for Vivad se Vishwas. “The answer is a categorical yes,” Pandey said.
At least 483,000 legacy disputes are stuck in various tribunals involving direct taxes amounting to Rs 9.32 lakh crore. In the Union budget presented on February 1, finance minister Nirmala Sitharaman said Vivad se Viswas would offer a one-time waiver of penalty and interest if the disputed amount is paid before March 31, 2020. The scheme did not offer clarity on refunds of the money already paid in excess of the disputed tax amount.
The scheme will be notified immediately after the Direct Tax Vivad se Vishwas Bill, 2020 is enacted by Parliament, a second official said, requesting anonymity. The Lok Sabha passed the Bill on Wednesday. Experts said the clarification will be welcomed by taxpayers who have already paid the entire tax, penalty and interest levied on them under protest and approached various tribunals.
“These new changes are extremely important and will provide additional comfort to the taxpayers who were planning to avail of the scheme, but were worried about the consequences. It also reinforces the government’s objective of actually settling past pending cases and not use this as a mere revenue enhancing mechanism,” said SR Patnaik, partner and head of the taxation practice at the legal firm Cyril Amarchand Mangaldas.
“This is a welcome move as taxpayers who have been sincere in paying taxes (albeit under protest) would have otherwise been short-changed and may not have opted for the scheme as a result,” said Abhay Sharma, partner at Shardul Amarchand Mangaldas & Co. The finance secretary said Vivad se Vishwas has been designed keeping the resolution of legacy disputes in mind. The scheme would also ensure that no prosecution would be initiated against taxpayers if they opt for the scheme.
Seeking to ease concerns of prosecution if an appeal goes against an assessee, Pandey said, “We have already said that under the Vivad se Vishwas scheme, if a settlement is done, no prosecution will be initiated.”
The Vivad se Vishwas Bill, 2020 was introduced in Parliament on February 5, 2020. To incorporate changes in the Bill based on feedback from taxpayers, the Cabinet on February 12, 2020 proposed amendments to the Bill to make it more inclusive. Passage of the Bill has been hindered by the logjam in the Parliament over the recent Delhi riots. Government officials said the Bill is expected to be passed by Parliament soon.
Gopal Bohra, partner at NA Shah Associates Llp, a firm of chartered accountants, said both the measures—the refund of excess amount already paid and protection from prosecution -would encourage taxpayers to opt for Vivad se Vishwas and reduce pending litigation.
“Taxpayers should examine their tax position and take advantage of the scheme if the tax position taken by them is not likely to succeed at the appellate forum,” he said.