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Taxman urges India Inc to opt for Vivad Se Vishwas scheme

Taxman urges India Inc to opt for Vivad Se Vishwas scheme

Mumbai: Top officials of the Income Tax (I-T) department recently reached out to members of Corporate India and senior tax professionals, strongly advising them to opt for the Vivad Se Vishwas scheme.

The last date for applying under the scheme, which will reduce litigation and improve the government’s tax collection in the present financial year, is December 31, 2020 — a deadline that several taxpayers and practitioners believe should be extended by a month or two. In the course of the virtual meeting held on December 8, the participants were told that the I-T department has issued internal instructions to promptly give effect to all appellate orders given before January 31, 2020, and come out with rectification orders to enable a larger number of tax payers to apply.

Under the scheme, taxpayers can settle litigations pending as on January 31, 2020, by paying tax on the disputed income and obtaining a full waiver of interest and penalty. A taxpayer who has won at the last appeal will have to pay 50% of the tax claimed by the department and 100% if the order has gone against her.

In several cases, even though appellate authorities have given their rulings before the cut-off date of January 31, the department is yet to give effect to these orders. Also, there are many cases, say tax professionals, where the department has not come out with rectification orders which are often issued in response to a request filed by the assessee to correct mistakes apparent from the record.

During the discussions, participants indicated that the delay could well be because the tax assessing officer may no longer be in charge of the case in the wake of recently introduced faceless IT assessment and scrutiny system which has done away with the human interface between tax officials and tax payers. In this context, one of the senior tax officials assured participants that directions have been given to department officials to dispose of applications — especially assesses who are potential VSV applicants. The official concerned also said that in case of delays, assesses can directly get in touch with the commissioners.

The virtual meeting, organized by KPMG, was attended by two principal chief commissioners — the highest ranking officials of the I-T department — along with some of the chief commissioners.

“It is a good, liberal scheme. You should avail it so that you can focus on business without any hassles,” said another official addressing the webinar.

According to Hitesh D. Gajaria, Senior Partner, KPMG, senior-most tax officials have assured that all steps within the law will be taken expeditiously to assist taxpayers to avail this scheme.

The response to the scheme has so far been lukewarm from the private sector. The Direct Tax Vivad se Vishwas Act, 2020 was enacted on March 17, 2020 to settle direct tax disputes stuck in various appellate forums. The government had extended the deadline for making payment under the scheme by three months to March 31, 2021. “While many interested in the scheme are willing to March 31, they want the government to extend the December 31, 2020 deadline (for applying) to end February.

According to the scheme, a taxpayer must settle all outstanding issues each year and does not have a choice to cherry pick issues. Some of the private companies are hesitant to settle disputes where they think they have a better chance of winning.

( Originally published on Dec 20, 2020 )

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