Vivaad Se Vishwas: Govt officials gear up to free ₹9L-crore stuck in disputes

THE DEPT HAS DIRECTED ITS FIELD FORMATIONS TO ‘APPROACH, CONVINCE AND FACILITATE’ LITIGANTS ABOUT THE BENEFITS OF THE SCHEME

NEW DELHI: Revenue officials swung into action on Wednesday to free up a chunk of the ~9 lakh crore stuck in direct tax disputes at various tribunals, shortly after the government introduced the tax amnesty scheme Vivaad se Vishwas (dispute to trust) in the Lok Sabha as a money bill.

The revenue department directed its field formations to “approach, convince and facilitate” litigant taxpayers under their jurisdictions about the benefits of the scheme, two officials with direct knowledge of the matter said.

The bill, named The Direct Tax Vivad Se Vishwas Bill, 2020, aims for resolution of tax disputes and related matters. In her budget speech on February 1, finance minister Nirmala Sitharaman announced the scheme to resolve direct tax disputes pending in various forums. The scheme offers waivers of penalty and interest if the disputed amount is paid before March 31, 2020.

Given that the timeline for the scheme is very short, it has been decided to do all the required groundwork on a war footing, the officials cited above said, requesting anonymity.

“As on 30th November, 2019, there were around 5 lakh cases pending at various levels with disputed tax arrears amounting to approximately ~9 lakh crore. Further, given the lower rate of disposal of appeals, the amount of disputed tax arrears locked up in these appeals is increasing frequently,” one of the officials said.

Revenue secretary Ajay Bhushan Pandey on Wednesday called a high-level meeting of direct tax officials after the introduction of ‘the Direct Tax Vivaad se Vishwas Bill, 2020’ in the Lok Sabha as a Money Bill and asked them to act without any delay, the officials said.

Although the bill does not specify the last date for the scheme, Central Board of Direct Taxes (CBDT) chairman Pramod Chandra Mody told HT on Monday that the scheme would be open until March 31, 2020 with a small window of an additional three months wherein taxpayers would have to pay some additional amount. The scheme would lapse on June 30, he said.

Sitharaman, in her budget speech, announced the scheme to resolve tax litigations cases on the lines of the Sabka Vishwas (everyone’s trust) legacy dispute resolution scheme for litigation related to excise and service tax that she had announced in her first budget on July 5, 2019. “Under the proposed Vivad Se Vishwas scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided he pays by 31st March, 2020,” she said.

The first official mentioned above said appeals pending with commissioner (appeals), Income Tax Appellate Tribunal, high courts or the Supreme Court as of January 31, 2020 were covered by the scheme.

A taxpayer who avails of the scheme by March 31 has to pay 100% of the disputed tax amount in case of appeals related to disputed tax, and 25% of the disputed penalty, interest or fee in case of appeals related to disputed penalty, interest or fee, he said.

Payments made after March 31 will require a taxpayer to pay 110% of the disputed tax amount in case of appeals related to disputed tax, and 30% of the disputed penalty, interest or fee in case of appeals related to disputed penalty, interest or fee, he added.

The meeting convened by the revenue secretary on Wednesday and attended by the Central Board of Direct Taxes (CBDT) chairman, Pramod Chandra Mody, directed tax officials to hold weekly video conferences to monitor the performance of the scheme at the ground level.

“Revenue secretary would do regular weekly review of the progress made, ”a second official present in the meeting said.

“The scheme is a win-win situation for both the taxpayers and the government as the taxpayers would get instant disposal of the dispute, no further cost of litigation and monetary benefits in the form of amnesty to the penalty and tax interest... while the government would be getting its long pending revenue and also, savings on the huge cost on resources that these disputes consume,” the second official mentioned above said.

Ganesh Raj, national leader of business tax services at EY India, said the tax authority should also take this as a “campaign” and also “educate the taxpayers “of the one-time opportunity. He called it a “long awaited measure”, which will also bring finality to litigation pending for a long time.