Vivad Se Vishwas Scheme: Taxpayer's delight but time window appears to be narrow

The bill will pave the way for a dispute resolution scheme for direct taxpayers on the lines of Sabka Vishwas Scheme for indirect taxpayers, which was announced last year

New Delhi: The meeting of the Union Cabinet chaired by Prime Minister Narendra Modi Wednesday approved changes in the Vivad Se Vishwas Bill 2020, which was tabled in the Lok Sabha earlier this month.

The bill will pave the way for a dispute resolution scheme for direct tax payers on the lines of Sabka Vishwas Scheme for indirect tax payers, which was announced last year. According to experts, taxpayers, whose cases have been pending before appellate tribunals and courts, have been awaiting for such schemes.

“Are people going to take the scheme? Yes. They want a quick resolution. They want to move ahead,” said Archit Gupta, Founder and CEO of Clear Tax.

In the bill moved in the Lok Sabha earlier this month, Finance Minister Nirmala Sitharaman stated that direct tax arrears amounting to more than Rs 9 lakh crore are stuck in litigation at various forums across the country.

“Considering that the actual direct tax collection in the financial year 2018-19 was Rs 11.37 lakh crores, the disputed tax arrears constitute nearly one year direct tax collection,” she said in the bill.

These cases are pending before commissioner appeals, Income Tax Appellate Tribunal (ITAT), and the High Court and Supreme Court. And a quick resolution will benefit both the taxpayers and the government.

“Frankly, these schemes get very popular, it's a good opportunity. People actually want to come clean. This is a good opportunity to do so,” Archit Gupta of Clear Tax told ETV Bharat.

Finance minister Nirmala Sitharaman had last year announced Sabka Vishwas Scheme (legacy dispute resolution scheme) for indirect tax payers whose dispute over central excise and service tax were pending before various forums.

Though the scheme received good response but the government was required to extend the deadline from December 31, 2019 to February 15, 2020 to encourage more taxpayers to avail the scheme.

According to some tax experts, though the scheme is likely to be popular as taxpayers are seeking a way out of costly and protracted litigation. However, they point out that the window to avail the scheme appears to be a narrow one as the scheme is yet to be notified.

In the Direct Tax Vivad Se Vishwas Bill, 2020, Nirmala Sitharaman set March 31, 2020 as the last date for making the declaration.

However, some tax experts point out that it will leave little time with taxpayers to avail the scheme and make declaration as the scheme is yet to be notified.

“Time window is very narrow,” said Pritam Mahure, a Pune based chartered accountant.

“The government should give time at least till June this year,” he told ETV Bharat.

He also points out that unlike Sabka Vishwas Scheme (legacy dispute resolution scheme) for indirect tax payers there is no relaxation in total tax payment liability and the bill introduced in the Lok Sabha only proposes to waive off the interest and penalty.

The bill does not propose any relaxation in the total tax payment liability.

In Sabka Vishwas Scheme, in addition to 100% waiver of interest and penalty, there was a relief of up to 70% of the total tax dues in certain cases that made the scheme popular.

(Article by senior journalist Krishnanand Tripathi)