Sabka Vishwas tax scheme ends with flying colours; now do this to ensure people pay tax

Updated: January 27, 2020 11:18 AM

This accomplishment lends credence to the theory that in a developing country like India, lower taxation rates attract greater compliance.

amnesty scheme, sabka vishwas, tax resolution, taxation, gst, cbic, goods and services tax,The success of the scheme is also attributable to the resoluteness & dexterity with which it has been administered by CBIC.
  •  Sanjay Rathi

Phew! the deluge has finally abated! As we assess the impact of the Sabka Vishwas Legacy Dispute Resolution Scheme (SVLDRS- 2019) which finally ended at the stroke of the midnight hour on the 15th of January, 2020, there is only one unanimous verdict – it has turned out to be one gigantic winner. A total of 1,89,229 declarations filed, coupled with a handsome revenue of Rs 14821 crores (almost 2 billion dollars) for the cash-starved government exchequer. The figures speak for themselves!

It would be a grave injustice to the scheme, if it’s success were to be measured solely on the basis of figures reported. A more rational evaluation would be to judge it vis-a-vis the expectations with which it was launched on the 1st of September, 2019. As per records, the number of potential declarations was estimated to be about 1,82,000 & with the actual number topping the expectations by a wide margin, the results have come as a pleasant surprise. On the revenue side, the figure of Rs 14821 crores may look piffling, but with the scheme granting a mammoth and truly unprecedented waiver of as much as 70% of tax dues, any expectations of windfall revenues were anyway fanciful.

The real success of the scheme is however embedded in the relief it has provided to the ordinary taxpayers. A break-up of the 1,89,229 declarations filed reveals that 69,712 were filed in the litigation category, 78,765 in unpaid arrears, 13,360 in respect of ongoing investigations and a whopping 27,392 were voluntary disclosures. Clearly, with close to 70,000 litigations settled in one stroke, multitudes of ordinary taxpayers stand unshackled & liberated of the torture of litigating through multiple levels over unending years, and the saved time, energy & funds can now be utilized by them to comply with GST provisions, which is the need of the hour. For the department too, the scheme is a veritable bonanza. In addition to the revenue garnered, the real benefit lies in the massive pruning of the litigations of all types.  The burden of legacy having been trimmed if not altogether obliterated, the department can now focus more on GST administration, which is the imperative today.

What made the scheme the success it has been?

It is relevant to analyze the reasons which have made SVLDRS-2019 the trailblazing success it has been. Lessons need to be drawn & applied to render future government schemes, which otherwise are expected to underperform, equally successful if not more.

It is largely acknowledged that SVLDRS- 2019 owes its massive success principally to the bold & attractive features which lace it, the most salient of them being the unprecedented 70% waiver of the tax dues. This accomplishment lends credence to the theory that in a developing country like India, lower taxation rates attract greater compliance, a lesson of profound importance for the tax administrations of the future. Additionally, the scheme owes its success to its breadth, as it covers every probable category of dispute. Its earlier embodiments viz the Kar Vivad Samadhan Scheme of 1998 (KVSS) and the Voluntary Compliance Encouragement Scheme of 2013 (VCES) were not as successful owing mainly to their restricted scope & cramped ambit. Yet another facet of the scheme which has made it an absolute hit with the trade is its being totally online.

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A taxpayer could file a declaration/communicate with the department online with there being no reason nor requirement to meet any departmental officer, thereby obviating any chances of harassment or complaints. The next absolutely enticing feature of the scheme is its simplicity and ease of application. The website has been recognized as extremely user-friendly. All in all the scheme is structured very pragmatically.

The biggest lesson emanating from the scheme is, however, likely to be missed, tucked deep as it is in the detail. Over 27,000 declarations, i.e. one in every seven, is a voluntary disclosure. Notably, the voluntary disclosures under SVLDRS-2019 don’t fetch any tax concession, but they do get a full waiver of penalty, interest & prosecution coupled with a legal guarantee that the disclosure will be accepted on face value with no questions asked. Initially, the voluntary declarants were acting with trepidation, fearful as they were of possible reprisals in the future, but distinctly the credibility of the government & its word has helped the taxpayers overcome this fear hurdle, otherwise such outstanding results would have been highly impossible. Clearly credibility matters!

In addition to its pragmatic design, the success of the scheme is also attributable to the resoluteness & dexterity with which it has been administered by the Central Board of Indirect Taxes & Customs (CBIC), as also the dedication & motivation displayed by the officers in the field in its implementation. Subsequent to the campaign launched to publicise the scheme through adverts & the innumerable symposia, workshops & help clinics organized in collaboration with trade & industry bodies, each potential declarant has been contacted and convinced. The department has toiled day & night & the results are visible. Rarely has such motivation been displayed!

Credit is also due to the trade & industry which has displayed maturity & wisdom in appreciating the benefits of the scheme & prudence in subscribing to it. The success of the scheme is a testimonial to the maturity of the Indian business, trade & industry.

The triumph of the scheme demonstrates that pragmatically structured ground-breaking schemes will always get traction, provided they are implemented with foresight and meticulous planning. The scheme is also an aberration, since contrary to the age-old adage that lessons should be drawn from failures, it pokes us to learn from its success.

Sanjay Rathi is IRS Commissioner for CGST & Central Excise. Views expressed are the author’s personal. 

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