Vivad Se Vishwas Scheme: All About Vivad Se Vishwas Scheme

Vivad se Vishwas scheme was announced in Union Budget 2020 to resolve the pending litigation under Income Tax Act.  Vivad se Vishwas was introduced in form of “Vivad se Vishwas Bill 2020” and such bill become Vivad se Vishwas Act 2020 on 17 March 2020 as its gets the approval of president.

What is Key Objective of Vivad se Vishwas Scheme:

Government has bring Vivad se Vishwas Scheme to close all the disputed matter in one go. The intension of government is to overcome with cases which are under litigation and increasing compliance cost of taxpayer and deferring the revenue of government. Following is the key objective of Vivad se Vishwas Scheme:

• To reduce pending tax litigations
• Generation of tax revenue on timely basis
• Providing benefit to taxpayers on account of saving of interest, penalty and fee
• Reduction in compliance cost of tax payers
• Optimum utilisation of resource and manpower of government
• Provide an mental relief to taxpayers

Cases or Disputes which are eligible for Vivad se Vishwas Scheme:

• Cases* which was pending/under litigation as on 31 January 2020
• Cases* against which order has been passed but time limit for filing appeal has not been expired
• Cases where objection has been filed by taxpayer against draft order of dispute Resolution Panel (DRP)
• Cases where DRP has given direction but final order not yet passed by assessing officer
• Declarant has initiated any proceeding or given any notice for arbitration, conciliation or mediation as referred to in clause 4 of the Bill is also covered. To become eligible under this scheme he has to withdraw the claim from arbitration process

*Cases means any matter or dispute which are pending at CIT, CIT (A), ITAT, High Court or Supreme Court. Such cases include revision application with principal commissioner or commissioner. Such cases may relate to Disputed Tax (including TDS or TCS), Disputed Interest, Disputed Penalty and Disputed Fee.

Cases which are not eligible under Vivad se Vishwas Scheme :

• Cases where demand is 5 Crore or more and such are under dispute on account of search conducted u/s 132 or 132A of income tax act. The limit of Rs. 5 Crore will be computed year wise.
• Cases which are at prosecution stage under Income Tax Act or Indian Penal Code
• Cases which are under dispute on account of undisclosed foreign income and/or assets
• Cases completed on the basis of information received from foreign countries
• Cases where notice has issued for assessment but assessment is pending and assessee filed appeal/write against such notice. i.e. scheme cannot be avail against notice only.
• Waiver application filed with authority, as it’s does fall under the definition of dispute or litigation
• Cases related to Equalisation levy, Wealth Tax, Security Transaction Tax, Commodity Transaction Tax etc.
• Cases which are in nature of offences under:
  • Indian Penal Code
  • Prevention of Money Laundering Act, 2002
  • Unlawful Activities (Prevention) Act, 1967
  • Narcotic Drugs and Psychotropic Substances Act, 1985
  • Prevention of Corruption Act, 1988
  • Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974
  • Benami Property Transactions Act, 1988
  • Special Court Trial in Securities Act, 1992

Payment to be made under Vivad se Vishwas Scheme:

• Cases where appeal is filed by tax payers:
  1. 1. Cases where payment has made till 31 March 2020
        • Search Cases: 125% of Disputed Tax. No Interest and Penalty
        • Other than Search Cases: 100% of Disputed Tax. No Interest and Penalty
        • Dispute/Litigation related to Interest, Penalty or Fee: 25% of disputed interest, penalty or fee and balance 75% would be waived off
     2. Cases where payment made after 31 March 2020
        • Search Cases: 135% of Disputed Tax. No Interest and Penalty
        • Other than Search Cases: 110% of Disputed Tax. No Interest and Penalty
        • Dispute/Litigation related to Interest, Penalty or Fee: 30% of disputed interest, penalty or fee and balance 70% would be waived off

• Cases where appeal is filed by Income Tax Department:
  1. 1. 1. Cases where payment has made till 31 March 2020
           • Search Cases: 62.5% of Disputed Tax. No Interest and Penalty
           • Other than Search Cases: 50% of Disputed Tax. No Interest and Penalty
           • Dispute/Litigation related to Interest, Penalty or Fee: 12.5% of disputed interest, penalty or fee and balance 75% would be waived off
        2. Cases where payment made after 31 March 2020
           • Search Cases: 67.5% of Disputed Tax. No Interest and Penalty
           • Other than Search Cases: 55% of Disputed Tax. No Interest and Penalty
           • Dispute/Litigation related to Interest, Penalty or Fee: 15% of disputed interest, penalty or fee and balance 85% would be waived off

Any amount paid in pursuance of a declaration made under section 4 shall not be refundable under any circumstance

When payment under Vivad Se Vishwas Scheme to be made:

Once Designated Authority has provided granted a certificate indicating amount therein then applicant is required to pay such amount within 15 days of receipt of certificate. Applicant is also required to submit payment details to Designated authority. 

How to file declaration under Vivad Se Vishwas Scheme:

Government is supposed to provide prescribed form in which declaration can be filed however as of now no form is prescribed to file declaration.  Such declaration is to be filed with designated authority and such designated authority will determine the amount payable by the applicant within 15 days of filing of declaration. Designated authority shall grant a certificate indicating amount that has to be paid.

Effects of Declaration filed under Vivad Se Vishwas Scheme:

Once Declaration is filed under Vivad Se Vishwas Scheme, appeal filed before CIT (A), ITAT shall be treated as deemed to be withdrawn and writs or appeal in High Court/Supreme court will be withdrawn by tax payers and department.

After making payment as per certificate, the designated authority shall not institute any proceeding in respect of an offence; or impose or levy any penalty; or charge any interest under the Income-tax Act in respect of tax arrears

Examples on Vivad Se Vishwas Scheme (Considering appeal filed by taxpayer and Dispute arise other than search: