Context:

• Recently Finance Minister Nirmala Sitharaman introduced in the Lok Sabha the much-awaited ‘Direct Tax Vivad Se Vishwas’ Bill 2020 to provide for resolution of disputed direct taxes.

About the issues:

• The tax litigation process in India is time-consuming and cumbersome.
• A plethora of cases is pending before various appellate forums and a humongous amount is locked up in appeals.
• As on November 30, 2019, the amount of disputed direct tax arrears stood at ₹9.32 lakh crore, and considering the profuse amount of time and resources tax disputes consume, a dispute-litigation scheme was the need of the hour for both taxpayers and the government.

About the Scheme:

• The Bill provides a lucrative option to the taxpayers to settle their cases pending before the Commissioner (Appeals), Income Tax Appellate Tribunal, High Court or Supreme Court as on January 31, 2020, irrespective of whether the demand in such cases is pending or has been paid.
• The pending appeal may be against disputed tax, interest or penalty in relation to an assessment or reassessment order or against disputed interest/ fee where there is no disputed tax. In fact, an appeal may even be against tax determined on defaults in respect of tax deducted/collected at source.
• Taxpayers willing to settle disputes under the scheme shall be allowed a complete waiver of interest and penalty if they pay the entire amount of tax in dispute up to March 31, 2020, after which 10 per cent additional disputed tax will have to be paid over and above the tax liability.
• Further, where the tax arrears relate to disputed interest or penalty only, then 25 per cent of disputed penalty/interest will have to be paid only while settling appeals relating to interest/penalty if payment is made up to 31st March 2020, beyond which the same shall be enhanced to 30 per cent.
• The scheme would not apply where tax in arrears related to assessments in the nature of search and requisition.