VIVAD SE VISHWAS BILL, 2020 – A SWEET PILL FOR TAXPAYERS?

Introduction

With the objective of resolving pending Income Tax related disputes at various stages and enhance tax collection out of the blocked huge amount of money to the tune of more than Rupees 9 lakh crores as on date. The original draft of the scheme Vivad se Vishwas was presented in the Parliament on 5th February, 2020 which was entirely revenue favour. Now after getting huge number of suggestions from the stakeholders, the union cabinet approved the second draft of the Scheme which makes the scheme workable for those it is meant for. Contact the best tax consultant in Gurgaon to know more.

Key Changes

• Now the scheme Vivad se Vishwas segregated into two parts; one, appeal filed by tax department in response of the taxpayer winning at lower forum and second, appeal filed by tax payer and amount payable under scheme is just half of the amount payable in the second case. Therefore equity is being incorporated in the cases where department raise the issue at appellate forum.
• Another key change is that Immunity will be granted from institution of any proceeding for prosecution for any offence under the Income-tax Act in respect of matters covered in the declaration and also provide immunity from imposition of penalty and levy of interest.
• In another change, the taxpayer would be granted the refund if the amount paid by taxpayer before filing declaration exceeds the amount payable under the Scheme.
• In another major change, depute in search cases are also eligible for the scheme where disputed tax is less than 5 crores on a yearly basis.
• Now specific exclusions of scheme are –

(i) Search case if disputed tax is more than Rs. 5 crore

(ii) Prosecution cases under the Income-tax Act or IPC filed by the Department

(iii) Cases relating to undisclosed foreign income and assets

(iv) Cases completed on the basis of information from foreign countries

(iv) Cases covered under the Narcotic Drugs and Psychotropic Substances Act, Special Courts Act, the Unlawful Activities (Prevention) Act, 1967, the Prevention of Corruption Act, the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, the Prevention of Money Laundering Act, 2002 or the Prohibition of Benami Property Transactions Act, 2016.

6   In addition to this some procedural changes is being approved by the cabinet.

Way Forward

Unlike a blanket tax amnesty, this scheme Vivad se Vishwas or Dispute to Trust is open to only those assessed who have contested their dispute to tax tribunals. Expectations of the Government are very high in view of the open disputes of cash deposits under demonetizations and matters related to penny stocks consist of huge tax demands at various forums.