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Vivad se Vishwas Scheme Union Budget 2020


Union Budget 2020 has introduced an amnesty scheme namely ‘Vivad se Vishwas Scheme ‘ for resolving disputes in direct tax matter. 

Under Vivad Se Vishwas Scheme, the taxpayer to pay only the amount of disputed tax, will get complete waiver on interest and penalty, if scheme is availed by March 31, 2020.-PIB Tweet.

The tweet is reproduced below-
While presenting the Union Budget 2020 in the Parliament on 1st February 2020, the Finance Minister Nirmala Sitaraman has announced the government is introducing No Dispute but Trust Scheme – ‘Vivad  Se Vishwas’Scheme in order to reduce tax litigation.

The extract of her budget speech is reproduced below-

125. No Dispute but Trust Scheme – ‘Vivad  Se Vishwas’Scheme

Sir, in the past our Government has taken several measures to reduce tax litigations. In the last budget, Sabka Vishwas Scheme was brought in to reduce litigation in indirect taxes. It resulted in settling over 1,89,000 cases. Currently, there are 4,83,000 direct tax cases pending in various appellate forums i.e. Commissioner (Appeals), ITAT, High Court and Supreme Court. This year, I propose to bring a scheme similar to the indirect tax Sabka Vishwas for reducing litigations even in the direct taxes.

Under the proposed ‘Vivad Se Vishwas’ scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided he pays by 31st March, 2020. Those who avail this scheme after 31st March, 2020 will have to pay some additional amount. The scheme will remain open till 30th June, 2020.

Taxpayers in whose cases appeals are pending at any level can benefit from this scheme.

I hope that taxpayers will make use of this opportunity to get relief from vexatious litigation process.

The details of the scheme are yet to be notified. However, the scheme aims to settle the huge number of pending direct tax cases. However, the press conference held by the FM after the budget presentation announced that those who avail of this scheme after 31st March 2020 will have to pay 10 percent additional amount.

The salient features of the scheme so far announced by the FM are:

1. The scheme can be availed by any person who is in an appeal for direct taxes matter.

2. The scheme if aviled may resolve pending 4,83,000 direct taxes appeals.

3. The appeal may be pending at any forum including CIT(A), ITAT, High Court and Supreme Court.

4. Under the scheme, only the disputed tax amount needs to be paid. There will be a complete waiver of interest and penalty.

5. The disputed tax amount must be paid before March 31, 2020. No details regarding payment by installments are not yet given.

6. The scheme will remain open till 30-06-2020. A taxpayer may pay the disputed tax under this scheme by 30th June 2020 but in this case, he has to pay 10 percent as an additional amount of disputed tax.

7. In case the disputed amount is related to interest and/or penalty, then 25 percent of the disputed amount of interest and/or penalty can be paid, if paid by 31st March 2020. It will increase to 30 percent if paid after 31st March 2020 but before 30th June 2020.

This amnesty scheme for direct taxpayers-Vivad Se Vishwas Scheme is introduced in the line of Sabka Vishwas Scheme for Indirect Taxes introduced by the Union Budget 2019.

Recently, in the past, the government came up with other amnesty schemes for direct taxpayers. Notable schemes are-

1. Direct Tax Dispute Resolution Scheme, 2016 introduced by the Finance Act, 2016. This scheme was similar to the introduced Vivad Se Vishwas Scheme wherein on payment of tax amount the penalty and interest amount would be waived. however, the response to the scheme was very tepid. Even the government had to extend the deadline by one month.

2. Income Declaration Scheme, 2016 introduced during the demonetization period. The scheme was related to disclosure of undisclosed money and pay the tax at a reduced rate and invest the rest in the scheme provided.

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