The Centre’s tax resolution scheme ‘Vivad Se Vishwas’ has resolved nearly a third of all direct tax disputes and has netted Rs 54,005 crore in tax revenue, 51% of which are from the central PSUs, Central Board of Direct Taxes (CBDT) chairman PC Mody told FE.
Although the expectations regarding the scheme was much higher — the government had originally set a target to collect Rs 2 lakh crore by the end of March 2020, but the Covid-19 pandemic upset the calculations — the government still flags the scheme as a success, citing that a 1998 scheme could only mop up Rs 739 crore with resolution of a few thousand disputes and another one in 2016 managed to resolve just 8,600 cases involving a tax demand of `631 crore.
“The numbers suggest that the scheme has been a “very successful” in terms of reduction of legacy disputes. With assessments happening in a fairer and objective manner now, disputes generation will be less going forward,” Mody said.
The top tax department official said 1,33,837 Form-1 were filed involving 1,48,690 dispute declarations with disputed tax worth Rs 1,00,437 crore. The central PSUs filed 1,385 forms with disputed tax involving Rs 35,109 crore, of which Rs 27,718 crore or nearly 79% were paid by these entities. Individuals and private corporate entities filed 1,31,582 forms with disputed taxes worth Rs 63,713 crore, of which Rs 25,267 crore or 40% were paid by them. State PSUs filed 870 forms with disputed taxes involving Rs 1,615 crore, of which Rs 1,020 crore or 63% were paid up by them.
As on January 31, 2020, there were 5.1 lakh direct tax dispute cases were pending with tax demands amounting to Rs 19.55 lakh crore. Out of these pending cases, disputes involving central PSUs were 2,676 with taxes in litigation at Rs 4.3 lakh crore while state PSUs had 6,409 pending cases with tax disputed at Rs 90,895 crore. Individuals and corporate entities had about 5 lakh tax disputes worth Rs 14.3 lakh crore as on January 31, 2020.
The Direct Tax Vivad se Vishwas Act, 2020, was enacted on March 17, 2020, to settle direct tax disputes locked up in various appellate forum. The deadline for filing deceleration and making payment under direct tax dispute resolution scheme was till March 31 and April 30, respectively.
The taxpayer is granted immunity from levy of interest, penalty and institution of any proceeding for prosecution for any offence under the Income Tax Act in respect of matters covered in the declaration.
The Vivad Se Vishwas scheme provides for settlement of disputed tax, disputed interest, disputed penalty or disputed fees in relation to an assessment or reassessment order. The dispute is settled on payment of 100% of the disputed tax and 25% of the disputed penalty or interest or fee.
The scheme launched in the Budget last year said that if the appeal is filed by the income tax department or the department has lost on an issue, then the assessee has to pay 50% of the disputed tax while the penalty and interest would be waived off.
In these cases, if the dispute is related to only penalty and interest then taxpayer has to pay only 12.5% of the disputed amount.
For case filed by the assessee in the higher forum, they have to pay 100% of the disputed tax (125% of disputed tax in case of search cases) while penalty and interest would be waived off. If the dispute is only about penalty and interest then 25% of the disputed penalty and interest is payable.
