In order to resolve the disputes relating to direct taxes, the Finance Minister Nirmala Sitharaman introduced a Bill in the Lok Sabha on the 5th of February, 2020 (Wednesday) to further impose an effect on her 1st February's Budget announcement. As seen on November 30th, 2019, the aggregate of the direct taxes has been Rs. 9.32 trillion. The Direct Tax "Vivad Se Vishwas" Bill of 2020 offers a waiver of interest, penalty and prosecution for settlement of the disputes. The disputes have to be pending before the Commissioner (appeals) in the Income Tax Appellate Tribunal (ITAT), High Courts, Supreme Court's as dated January 31st, 2020. A complete waiver of interest and penalty will only be given in cases of payment made by March 31st, 2020 further to which an additional 10% disputed amount will have to be paid.
The Bill states that the amount of time, energy and resources required by the tax disputes is huge. And this further leads to the government's deprivation in the revenue collection. The taxpayers as well as the government will be benefited out of the scheme. It will be noted that a pending appeal might be against a disputed tax, interest or a penalty in relation the orders that will be assessed or reassessed. The appeal can also be against the determination of taxes on the defaults relating to the deduction of taxes or collection. It also states that 25% of the disputes penalty or interest needs to be paid pertaining to cases of disputed interests during the settlement of appeals upto March 31st, 2020. Following 1st April, 2020 it will be 30% of the penalty rates. The Budget has scaled the direct tax collection Target to Rs. 11.7 trillion in the estimates for fiscal year 2020. A year to year would require at least a 2.9% growth rate. The Bill will prove useful by helping reduce the government's litigation expenditure and further help in the process of revenue generation. The Bill is supposedly expected to resolve 483,000 direct tax disputes pending in the tribunals.
The Sabka Vishwas Scheme of 2019's Budget session of reducing litigation in indirect taxes helped settle over 1,89,000 cases. The scheme will not apply to the cases that are filed for prosecution in the failure of tax payments. The Central Board of Direct Taxes (CBDT) has asked it's offices for the provision of data on pending appeals in High courts across the country by next week. The appeals have to be pending as on January 31st, 2020. This will be essential in helping prepare the groundwork for direct tax resolution.
“In order to implement the scheme, the CBDT needs database on such litigations pending at the high court level,” the communication to the commissioners read.
What others think of the scheme :
- Rakesh Nangia, Chairman of Nangia-Anderson Consulting thinks the above-mentioned Bill will be beneficial while settling the cases that would likely include the surplus of the unexplained cash made deposits during demonetization of 2016. He added, “It would be beneficial to such taxpayers, to pay the tax amount and settle the disputes without imposition of interest and penalty."
- Neeru Ahuja, partner at Deloitte India focused on the timelines and everything needs to be done before hitting the Marsh 31st deadline.
- Amit Maheshwari,managing partner, at Ashok Maheshwary & Associates, stated on how the order that would be passed by the designated authority will be final. And no further recourse from appeals or under alternate dispute resolution will be available to the taxpayers.
- Congress MP Shashi Tharoor has contended that the Bill equates an honest taxpayer with a dishonest one thus violating the rules of equality.
Author - Dyuti Pandya