The Central Board of Direct Taxes has issued a direct tax scheme announced in Budget 2020, for settling tax disputes between individuals and the Income Tax department.

The scheme offered complete waiver on interest and penalty to the taxpayers with a full and final settlement of the dispute if the scheme was availed by March 31, 2020. An individual opting for settlement after March 31, 2020, was required to pay an additional 10 per cent penalty on the disputed tax amount. However, with the introduction of Circular 21, dated 4 December 2020, to provide a second set of clarifications concerning the Vivad Se Vishwas Scheme. This article focusses on its Objectives, Salient Features, Eligibility, and Exclusion of Vivad Se Vishwas Scheme 2020.

Objectives of Vivad Se Vishwas Scheme 2020 

• Reduce income tax pending litigation
•  Generate timely revenues for the Government 
• Help taxpayers end their tax disputes with the department by paying disputed tax and get a waiver from payment of interest and penalty. Also get immunity from prosecution. 

Salient Features of Vivad Se Vishwas Scheme 2020 

• Key dates – date of opening/closing, payment dates
• Eligibility – class of taxpayers eligible to settle disputes
• Payment terms – what is the amount to be paid for settlement of a dispute
• Exclusion – class of taxpayers excluded from the Bill 
• Consequences – Benefits, immunity etc under the Bill
• Delegated Legislation – the power to make rules, remove difficulty etc Vivad Se Vishwas Scheme 2020 Salient Features of Vivad Se Vishwas
• Start date-Date on which the Bill gets the assent of Hon’ble President after being passed by the Parliament. 
• Last Date-Date to be notified by the Government (Likely to be 30th June 2020) 
• Payment- Required by 31st March 2020. After this date and before the closure of scheme the payment shall be at a higher rate.

Salient Features – Eligibility 

• Appeals, writs, SLPs, arbitration (filed by Department or taxpayer) filed on or before 31 Jan 2020.
•  Orders for which time for filing appeal has not expired on 31 Jan 2020. 
•  Cases pending before the Dispute Resolution Panel (DRP).
•  Cases where DRP issued direction on or before 31 Jan 2020 but the order has not yet been passed.
• Cases where assessee filed a revision application under section 264 on or before 31 Jan 2020. 
• Dispute, where payment has already been made, shall also be eligible.
• The pending appeal, writ, SLP, arbitration could be against- 
• Disputed tax (including interest or penalty on such disputed tax) concerning an assessment or reassessment order 
• Disputed interest, disputed penalty or disputed fees where there is no disputed tax. 
• Disputed tax can also include the tax determined on default in respect of tax deducted at source (TDS) or tax collected at source (TCS). 
• Disputed tax shall include a tax on enhancement notice

Exclusion from Vivad Se Vishwas Scheme 2020 

• Search cases if disputed tax in a year is more than Rs.5 crore.
• Cases where the prosecution has been initiated by the department under the Income-tax Act or Indian Penal Code.
•  Cases involving undisclosed foreign income and assets.
• Cases completed based on information received from a foreign jurisdiction. 
• Cases where a person is notified under the Special Courts Act, 1992 or detained under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. 
• Cases covered under 

1. Narcotic Drugs and Psychotropic Substances Act,
2. Unlawful Activities (Prevention) Act,
3. Prevention of Corruption Act,
4. Conservation of Foreign Exchange and Prevention of Smuggling Activities Act,
5. Prevention of Money Laundering Act,
6. Prohibition of Benami Property Transactions Act.