It is being contemplated that the changes include expansion of the scope of cases in which a taxpayer can avail benefits.
Direct tax filers will have more grounds to clear their litigation under the ‘Vivad se Vishwas’ scheme as the government has proposed certain changes to the draft bill. It is being contemplated that the changes include expansion of the scope of cases in which a taxpayer can avail benefits and rationalisation of the amount of disputed tax to be paid under the scheme, according to the EY Tax Alert report. After rolling out ‘Sabka Vishwas’ scheme to clear the pending litigations related to indirect taxes, the government introduced ‘Vivad se Vishwas’ scheme in the recent budget to curb the rising cases of litigation related to direct taxes.
As per the draft bill, a taxpayer whose appeal is pending as on 31 January 2020 before the First Appellate Authority (FAA), ITAT), HC or SC are provided a one-time opportunity to settle the disputes by making an application and once it is accepted and the taxpayer has paid the full disputed tax amount before 31 March 2020, the taxpayer would be granted immunity from interest and penalty levy, as well as prosecution.
Similarly, the disputed amount in relation to interest levy and penalty can be settled by payment of 25 per cent of the disputed amount with a waiver of the balance amount. However, in cases where the disputed amount is paid post 31 March 2020, there will be a 10 per cent increase in the amount payable.
Meanwhile, despite the government’s efforts, the pendency of appeals has substantially increased because the appeals filed are much higher, compared to the appeals that are disposed of. At present, there are 4.83 lakh direct tax cases pending in various appellate forums such as Commissioner of Income Tax (Appeals), Income Tax Appellate Tribunals (ITAT), High Courts (HC) and the Supreme Court (SC), going by the EY report.