Vivad se Vishwas: Tax Amnesty Scheme: What, When, How, For Whom

CA Ajmal Muhajir
Director, Chartered Accountant

15-Apr-2020

Every year our Indian Government comes up with amnesty schemes of various taxes. In past years, the government had already launched schemes like Income & Asset Declaration Scheme, Voluntary Disclosure of Income Scheme, Direct Tax Dispute Resolution Scheme 2016, Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019, etc.

Tax amnesty Schemes are the schemes for a short duration for the specified taxes or legal proceedings, where the eligible taxpayers have to pay the prescribed amount of liability in exchange for proper disclosure. Forgiveness of tax liability includes interests and penalties and forego of any legal proceedings. 

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On one side it is a relief to taxpayer’s hardships, while on the other side it is a economic and financial strategy by government to clear all the appeals and increase the tax revenue.

About 88000 appeals are pending before Income Tax Appellate Tribunal and about 5 lakh Direct tax disputes involving tax demands of Rs. 9.5 lakh crore are yet to be resolved as of now.

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To deal with this matter, government has introduced a new direct tax amnesty scheme viz VIVAD SE VISHWAS SCHEME 2020 under the act ‘the Direct Tax Vivad se Vishwas Act, 2020’

This scheme was introduced after the success of the “Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019”, which was introduced to reduce Indirect Tax disputes.

Who can avail?
An Assessee having any appeal pending before Income Tax Appellate Tribunal, Commissioner (Appeals), High Court or Supreme court, in respect of disputed tax/interest/penalty as on or before specified date i.e. 31-01-2020, can opt for this scheme. Search and seizure Cases where the disputed amount is less than Rs. 5 crore in a year.

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Also, for Demand orders whose appeal time has not expired as on 31-01-2020 and revision applications pending on or before 31-01-2020, can opt for this scheme.

Who cannot avail?
This scheme is not available to the person having : 

1. Assessments under Section 153A/153C of the Income-Tax Act (i.e Search Assessments where demand is for more than Rs. 5 crore )
2. Cases under prosecution. (Prosecution includes any offence, wrongful act, crime)
3. Undisclosed Foreign Income/Assets
4. Assessment related to Section 90 and 90A of the Income-Tax Act (Double Taxation Relief Agreement)
5. Appeals on which Notice u/s 251 (Disposal of appeals) of the Income-Tax Act has been issued.
6. In respect of whom prosecution for any offence punishable under the provisions of
   1. the Indian Penal Code,
   2. the Unlawful Activities (Prevention) Act, 1967,
   3. the Narcotic Drugs and Psychotropic Substances Act, 1985,
   4. the Prevention of Corruption Act, 1988,
   5. the Prevention of Money Laundering Act, 2002,
   6. the Prohibition of Benami Property Transactions Act, 1988
   7. to any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 on or before the filing of declaration.

{the above picture is the summary of the scheme as provided by Income-Tax department on their E-filing Website}

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How this scheme works?
A. Scheme Availed by Taxpayer on or before 31stMarch 2020:

Case 1: Where the disputed amount is Tax+Interest + Penalty –

Search cases: Amount payable will be 125% of tax only. [Interest & Penalty will be waived off]
Other than Search cases: Amount payable will be 100% of tax only. [Interest & Penalty will be waived off]
Case 2: Where the disputed amount is Interest + Penalty –

For all cases: Amount payable will be 25% of disputed interest and penalty.

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B. Scheme Availed by Taxpayer between 1st April 2020 to 30th June 2020:

Case 1: Where the disputed amount is Tax+Interest+Penalty –

Search cases: Amount payable will be 135% of tax only. [Interest & Penalty will be waived off]
Other than Search cases: Amount payable will be 110% of tax only. [Interest & Penalty will be waived off]
Case 2: Where the disputed amount is Interest+Penalty –

For all cases: Amount payable will be 30% of disputed interest & penalty.

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C. Scheme Availed by Tax Department on or before 31stMarch 2020:

Case 1: Where the disputed amount is Tax+Interest+Penalty –

Search cases: Amount payable will be 62.5% of tax only. [Interest & Penalty will be waived off]
Other than Search cases: Amount payable will be 50% of tax only. [Interest & Penalty will be waived off]
Case 2: Where the disputed amount is Interest+Penalty –

For all cases: Amount payable will be 12.5% of disputed interest & penalty.

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D. Scheme Availed by Tax Department between 1st April 2020 to 30th June 2020:

Case 1: Where the disputed amount is Tax+Interest+Penalty –

Search cases: Amount payable will be 67.5% of tax only. [Interest &am

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