Amendments to Vivad Se Vishwas Scheme
The Indian Finance Minister announced the introduction of the Vivad Se Vishwas scheme during her budget speech with a view to “provide for resolution of pending tax disputes”. The scheme was introduced after the success of “Sabka Vishwas Scheme” which was introduced to reduce the indirect tax disputes. The scheme provides waivers from interest and penalty.
The initial bill introduced by the Government needed a lot of clarifications thus the Government introduced the amendments and the same got approved by the Union Cabinet on 12th February 2020. The amendments are as below:-
Definition of Appellant
The definition of appellant got amended to cover those case where the matter is pending with DRP; where the DRP has issued the directions but the AO has not passed the final order; where the order has been passed by the AO/HC/SC within the due date but the time for filing the further appeal is not yet expired and where the application for revision has been filed by the taxpayer but the application is pending as on specified date
Computation of Disputed Demand:
The formula which was earlier provided to compute the disputed demand got replaced with fact-based definition of disputed demand. Now, the government clarified the disputed demand shall be computed assuming the additions against which the appeal has been filed has been confirmed by the higher authority.
Exclusions
-Earlier, the cases where the enhancement notice was issued by the CIT(A) was out of the scope of the scheme; after the government also covered those cases where notice of enhancement has been issued by the CIT(A) u/s 251 of the Act.
-Earlier the assessment based on search u/s 132 and 132A was excluded from the scope of the scheme. Now the government has covered the cases of assessment which are made on the basis search initiated and if the disputed tax does not exceed INR 5 crore.
Computation of Tax Payment
In the case of departmental appeal, the taxpayer is required to pay 50% of the disputed tax liability instead of 100% under the scheme;
Where the taxpayer has also got a favorable judgment from ITAT/HC/SC earlier then the taxpayer is required to pay 50% of the disputed tax liability instead of 100% under the scheme for the matter which is under consideration;
Withdrawal of Appeal:
Earlier the taxpayer was required to withdraw the appeal before the filing of the declaration and proof was required to be submitted along with the declaration. Now, after the amendment, the taxpayer is required to withdraw the appeal only after the issuance of the final certificate by the authority.
No presumption:
It is clarified in the amendment that any declaration shall not amount to conceding the tax position and shall not be lawful for the income-tax authority to contend that the declarant has acquiesced the decision of the disputed issue by settling the dispute.
Refund of excess amount:
It is clarified in the amendment that the amount paid by the taxpayer over the amount require to be paid under the scheme, shall be refunded but no interest shall be provided along with the refund.
Adjustment of Losses: The taxpayer has been provided an option either to pay a notional tax on the disputed demand or accept the reduced losses/depreciation