While rendering the Budget for the year 2020 on 1st February, 2020, the hon’ble Minister of Finance Nirmala Sitharaman, made important announcements about reducing the matters of the pending litigations related to tax collection, substantially. The ministry has introduced “Vivaad se Vishwas- Amnesty Scheme” for the same which is a dispute resolution scheme. The Direct Tax Vivaad se Viswas Bill, 2020 has been introduced in the Lok Sabha on 5th February, 2020 to implement the scheme. The provisions of the bill to regulate the amnesty scheme have been explained and discussed as under-
- Applicability of the Amnesty Scheme:
In case where a person has filed an appeal or the income tax department has filed an appeal or an appeal has been filed by both against an assessment or reassessment order. Or appeals in respect with the Tax Deducted at Source (TDS) or Tax Collected at Source (TCS), pending before the Hon’ble Supreme Court or High Court or ITAT or CIT (A) as on 31st January, 2020. The new amnesty scheme is applicable in such scenarios irrespective of whether all such demands in these cases are pending or already paid are eligible to make a declaration.
- Objective of the Amnesty Scheme:
The main objective and aim behind introducing this scheme is as follows-
- To resolve the disputes of the direct tax.
- To put the litigations to rest by paying all the disputed arrears of tax along with concession.
- Procedure under Amnesty Scheme:
The procedure to solve any tax related disputes under the new amnesty scheme is as follows-
- The taxpayer has to file a declaration as per the prescribed format and form with the Designated Authorities that are not below the rank of Commissioner of Income Tax (CIT).
- Under Section 5(1), from the date of issue of certificate by the designated authority, all the relevant appeals are deemed as withdrawn, once such declaration is made by the declarant.
- The declarant has to furnish an undertaking in the relevant prescribed form in order to waive off all the direct or indirect rights in the matter for seeking and pursuing the remedy in the dispute. And for making claims for the arrears of tax.
- Within 15 days of the receipt of the declaration form, the designated authority has to determine the payable amount of the declarant through an order and grant the certificate.
- Within 15 days of receipt of the certificate issued by the authority, the declarant has to pay the determined amount. Also, the declarant is required to intimate the designated authority about the same, after which it shall pass a conclusive order to come into effect.
- As a consequence of the passed order by the designated authority, no litigation or proceedings against the declarant can be instituted in respect to tax arrears or offence, penalty or interest related to it.
- Also, the amnesty scheme clarifie that any paid amount for pursuance of the declaration made by the declarant is non-refundable in any circumstances.
- Exclusions as per Amnesty Scheme bill:
The following have been excluded under the amnesty scheme by the Finance Ministry-
- Tax Arrears relating to the Appeal:
- Assessment year for which the prosecution has been instituted on or before the date of declaration filing.
- Any tax arrears that arise out of order passed under Section 153A or Section 153C.
- Assessment and reassessment based on the received information under an agreement related to tax arrears referred in Section 90 or Section 90A.
- Appeals before the CIT (A) in respect to notice of enhancement under Section 251, that have been issued on or before 31st January, 2020.
- Income from any source and asset that are located outside of India and have not yet been disclosed in the Income Tax Return.
- Any person who has been notified under Section 3 of the Special Court (Trial of Offence) Act,on or before the declaration is filed.
- Any person who has been summoned with an order issued under the provisions and law of Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 on or before the declaration filing.
- Any person against whom a case or prosecution has been instituted under Indian Penal Code (IPC), the Unlawful Activities (Prevention) Act, 1967, Narcotics Drugs and Preventions, Prevention of Cruelity to Animals (PCA) Act, Prevention of Money Laundering Act or Prohibiton of Benaami Property Transaction Act.