With over Rs 9 lakh crore worth direct taxes locked up in litigation, the government on Wednesday introduced a Bill in Parliament which seeks to provide an option to taxpayers to pay only the disputed tax by March 31 and get complete waiver of interest and penalty.
Finance Minister Nirmala Sitharaman on Wednesday introduced 'The Direct Tax Vivad se Vishwas Bill, 2020' in the Lok Sabha.
Taxpayers willing to settle disputes under the scheme shall be allowed a complete waiver of interest and penalty if they pay the entire amount of tax in dispute up to March 31, 2020, after which 10 per cent additional disputed tax shall have to be paid over and above the tax liability.
Further where the tax arrears relate to disputed interest or penalty only, then 25 per cent of disputed penalty/interest shall have to be paid only if the payment is made by March 31, 2020, beyond which the same shall be enhanced to 30 per cent.
The scheme would remain open till June 30, 2020.
In a meeting with the senior officers of the Central Board of Direct Taxes (CBDT) and Revenue Secretary Ajay Bhushan Pandey, it was decided that the members of the apex income tax body will take weekly video conferencing to monitor performance at the ground level.
Besides, each income tax officer would be required to approach, convince and facilitate the litigant taxpayers under his jurisdiction to avail the scheme and the performance of the officers would be rated on the basis of their success in executing the scheme, an official said.
About 5 lakh cases are pending at various levels with disputed tax arrears amounting to Rs 9.32 lakh crore as on November 30, 2019.
"Over the years, the pendency of appeals filed by taxpayers as well as government has increased due to the fact that the number of appeals that are filed is much higher than the number of appeals that are disposed. As a result, a huge amount of disputed tax arrears is locked up in these appeals," said the statement of objects and reasons of the Bill.
Taxpayers whose appeals are pending with Commissioner (Appeals), Income Tax Appellate Tribunal, High Court or Supreme Court as on the January 31, 2020 can seek resolution under the scheme.
Appeals against disputed tax, interest or penalty in relation to assessment or reassessment order or against disputed interest or fee where there is no disputed tax, and disputes related to defaults in respect of Tax deducted at source or tax collection at source are covered under the scheme.
The scheme shall not apply where tax in arrears related to assessments in the nature of search and requisition.
Declaration cannot be made in respect of disputed tax of an assessment year in respect of which prosecution has been instituted on or before the date of filing declaration.
Further, tax in arrears relating to undisclosed foreign income/asset, assessment or reassessment made on the basis of information received under DTAA can also not be declared.
A person in respect of whom prosecution for any offence under the Indian Penal Code/ Prevention of Money Laundering Act/ Prohibition of Benami Property Transactions Act has been instituted or a person who has been convicted under the Acts can also not avail the scheme.
Giving the rationale behind the scheme, Sitharaman said it will reduce the litigation expenditure for the government and at the same may help in generating some revenue.
Nangia Andersen Consulting Chairman Rakesh Nangia said: "This can be a very beneficial scheme for settlement for cases such as additions of unexplained cash deposited during demonetisation period, additions for penny stocks, etc. where factually the Taxpayers have high exposures."
Shardul Amarchand Mangaldas & Co Partner Abhay Sharma said "the exclusion from its ambit of cases involving either undisclosed foreign income or based on exchange of information with foreign tax authorities deserves a re-look, given the challenges typically faced in enforcement of tax demands in such cases".
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