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CBDT issues Circular clarifying provisions of Direct Tax Vivad se Vishwas Act, 2020-set of 55 FAQs

cbdt-issues-circular-clarifying-provisions-of-direct-tax-vivad-se-vishwas-act-2020-set-of-55-faqs


CBDT issues further clarification on provisions of the Direct Tax Vivad se Vishwas Act, 2020 by FAQs Circular No. 09/2020 dated 22.04.2020 clarifying provisions of Direct Tax Vivad se Vishwas Scheme 2020.


Earlier, CBDT issued 55 FAQs by Circular No. 07/2020 clarifying provisions of Direct Tax Vivad se Vishwas Scheme 2020 on 04.03.2020. This circular was issued prior to the enactment of Direct Tax Vivad se Vishwas Act, 2020 (DTVSV Act). and hence a new Circular 9/2020 is now being issued which is in accordance with the provisions of the DTVSV Act, 2020.

It is further clarified that on the issuance of this Circular 9/2020, the earlier Circular No. 7/2020 dated 04-03-2020 is withdrawn.

Section 10 and 11 of the Vivad se Vishwas empowers the Board or the Central Government to issue directions or orders in the public interest or to remove difficulties. This circular is such direction/order issued under section 10 and section 11 of the Vivad se Vishwas. Thus answers to some of the questions in this circular extend the application of Vivad se Vishwas in the public interest or to remove difficulties, under section 10 and section 11 of Vivad se Vishwas.


The ‘Vivad se VishwasScheme was announced during the Union Budget, 2020, to provide for dispute resolution in respect of pending income tax litigation. Pursuant to the Budget announcement, the Direct Tax Vivad se Vishwas Bill, 2020 (hereinafter called Vivad se Vishwas Scheme) was introduced in the Lok Sabha on 5th of February, 2020 and passed by it on 4th of March, 2020. The Bill was finally notified on 17.03.2020 as the Direct Tax Vivad se Vishwas Act, 2020 (3 of 2020) after it received the assent of the Hon'ble President of India. Rajya Sabha had passed the Direct Tax Vivad Se Vishwas Bill, 2020 on 13.03.2020. The CBDT has notified the Direct Tax Vivad se Vishwas Rules, 2020 and the forms under the DTVSV Act on 18.03.2020.

The income tax department has also enabled the online filing of Form 1 and Form 2 on its e-filing portal.


The objective of Vivad se Vishwas is to inter alia reduce pending income tax litigation, generate timely revenue for the Government and benefit taxpayers by providing them peace of mind, certainty and savings on account of time and resources that would otherwise be spent on the long-drawn and vexatious litigation process. Subsequently, based on the representations received from the stakeholders regarding its various provisions, official amendments to Vivad se Vishwas have been proposed. These amendments seek to widen the scope of Vivad se Vishwas and reduce the compliance burden on taxpayers.

The 16-page Circular contains the clarifications on various issues of the Direct Tax Vivad se Vishwas Scheme, 2020 in the form of 55 frequently asked questions (FAQs) categorized in following four parts-

1. QUESTIONS ON SCOPE/ ELIGIBILITY (Q. No.1 - 24)

2. QUESTIONS RELATED TO CALCULATION (Q. No. 25-40)

3. QUESTIONS RELATED TO PROCEDURE (Q. No. 41-50)

4. QUESTIONS RELATED TO CONSEQUENCES (Q. No. 51-55)

During the Union Budget, 2020 presentation, the 'Vivad se Vishwas Scheme' was announced to provide for dispute resolution in respect of pending income tax litigation. Pursuant to Budget announcement, the Direct Tax Vivad se Vishwas Bill, 2020 (the Bill) was introduced in the Lok Sabha on 5th Feb, 2020. Subsequently, based on the representations received from the stakeholders regarding its various provisions, official amendments to the Bill were proposed. These amendments sought to widen the scope of the bill and reduce the compliance burden on taxpayers.

After the introduction of the bill in Lok Sabha, several queries were received from the stakeholders seeking clarifications in respect of various provisions contained therein. The government had considered these queries and had decided to clarify the same in form of answers to frequently asked questions (FAQs) vide Circular no 7 of 2020 dated 4th March 2020. These clarifications were, however, subject to approval and passing of the bill by the Parliament and receiving the assent of the Hon'ble President of India.

The Bill has since been passed by the Parliament and has also received the assent of the Hon'ble President of India and has now been enacted as The Direct Tax Vivad Se Vishwas Act, 2020 (Vivad se Vishwas). The objective of Vivad se Vishwas is to inter alia reduce pending income tax litigation, generate timely revenue for the Government and benefit taxpayers by providing them peace of mind, cel1ainty and savings on account of time and resources that would otherwise be spent on the long-drawn and vexatious litigation process.

55 questions contained in Circular No. 7 of 2020 arc reissued under this circular with following modifications-

(i) Vivad se Vishwas referred to Direct Tax Vivad se Vishwas Bill, 2020 in circular no 7. However, in this circular it refers to The Direct Tax Vivad Se Vishwas Act, 2020;

(ii) Since clauses of the Bill have now become sections in the Vivad se Vishwas, the reference to "clause" in circular no 7 has been replaced with "section";

(iii) Reference to declaration form in circular no 7 has been replaced with referencing of the relevant form since rules and forms have now been notified; and

(iv) Answer to question no 22 has been modified to reflect the correct intent of the law. It has now been clarified that where only notice for initiation of prosecution has been issued without prosecution being instituted, the assessee is eligible to file a declaration under Vivad se Vishwas. However, where the prosecution has been instituted with respect to an assessment year, the assessee is not eligible to file declaration for that assessment year under Vivad se Vishwas, unless the prosecution is compounded before filing the declaration.

Update:

CBDT issues ​Corrigendum to Circular No. 9/2020 regarding Further clarification on provisions of the Direct Tax Vivad se Vishwas Act, 2020:

In the Circular No. 9/2020 of the Government of India, Ministry of Finance, Department of Revenue (Central Board of Direct taxes), issued on the 22nd April, 2020,-

(i) in the answer to question number 1, for the word "Bill" read the word "Act"; and

(ii) in the answer to question numbers 26,28, 29 and 41 for the figures, letters and word "31" March, 2020", wherever they occur, read the figures, letters and word "30th June, 2020". 



The text of the circular is reproduced below.



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