Vivaad Se Vishwas Scheme deadline extended till 31st March, 2021
The economic impact of the 2020 coronavirus pandemic in India has been largely disruptive. The lockdown though necessary has led to a disastrous impact on the economy. With an ever-increasing corona virus cases, lockdown was considered as an only solution to flatten the curve. However, the measures which were implemented to avoid a human disaster, have in turn led to the birth of several issues such as unemployment, recession, hindrance to economic growth, financial instability and so on.
The Government of India announced a variety of measures to tackle the situation, from food security and extra funds for healthcare and for the states, to sector related incentives and tax deadline extensions. Now, the government has extended the deadline for settling tax disputes under the Vivad se Vishwaas scheme without paying any interest and penalty to 31st March, 2021. The earlier deadline was 31st December, 2020. This was announced by the Ministry of Finance vide Notification No. 85/2020 dated 27th October, 2020.
What is Vivad se Vishwas scheme?
This is a direct tax scheme announced in Budget 2020, for settling tax disputes between individuals and the income tax department. Earlier, 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 31st December, 2020.
An individual opting for settlement after31st December, 2020 was required to pay additional 10% penalty on the disputed tax amount. However, now till December 31, 2020, you do not have to pay any penalty.
What shall be the amount payable by the declarant under this scheme?
|Nature of tax arrear||Amount payable under this Act on or before 31.03.2021||Amount payable under this Act on or after 01.04.2021|
|where the tax arrears are the aggregate amount of disputed tax, interest chargeable or charged on such disputed tax and penalty leviable or levied on such disputed tax||amount of the disputed tax||the aggregate of the amount of disputed tax and 10% of disputed tax|
|where the tax arrears include the tax, interest or penalty determined in any assessment on the basis of search under section 132 or section 132A of the Income-tax Act.||the aggregate of the amount of disputed tax and 25% of the disputed tax||the aggregate of the amount of disputed tax and 35% of disputed tax|
|where the tax arrears relate to disputed interest or disputed penalty or disputed fee.||25% of disputed interest or disputed penalty or disputed fee||30% of disputed interest or disputed penalty or disputed fee|
What is the manner of payment under this scheme?
The designated authority shall, within 15 days from the date of receipt of the declaration, by order, determine the amount payable by the declarant in accordance with the provisions of this Act and grant a certificate to the declarant containing particulars of the tax arrears and the amount payable after such determination.
The declarant shall pay the amount determined within 15 days of the date of receipt of the certificate and intimate the details of such payment to the designated authority in the prescribed form and thereupon the designated authority shall pass an order stating that the declarant has paid the amount.
Any amount paid in pursuance of a declaration under this scheme shall not be refundable under any circumstances.
When will this scheme not be applicable?
The said scheme shall not be applicable in the below mentioned cases:
- In respect of tax arrears:
- relating to an assessment year in respect of which an assessment has been made under section 143(3) or section 144 or section 153A or section 153C on the basis of search initiated under section 132 or section 132A, if the amount of disputed tax exceeds Rs 5 crore
- relating to an assessment year in respect of which prosecution has been instituted on or before the date of filing of declaration;
- relating to any undisclosed income from a source located outside India or undisclosed asset located outside India
- relating to an assessment or reassessment made on the basis of information received under an agreement referred to in section 90 or section 90A, if it relates to any tax arrear
- to any person in respect of whom an order of detention has been made under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 on or before the filing of declaration
- to any person in respect of whom prosecution for any offence punishable under the provisions of the Unlawful Activities (Prevention) Act, 1967, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Prevention of Corruption Act, 1988, the Prevention of Money Laundering Act, 2002, the Prohibition of Benami Property Transactions Act, 1988 has been instituted on or before the filing of the declaration or such person has been convicted of any such offence punishable under any of those Acts
- to any person in respect of whom prosecution has been initiated by an Income-tax authority for any offence punishable under the provisions of the Indian Penal Code or for the purpose of enforcement of any civil liability under any law for the time being in force, on or before the filing of the declaration or such person has been convicted of any such offence consequent to the prosecution initiated by an Income-tax authority
- 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.
As per the scheme income tax disputes settled under it cannot be reopened in any other proceeding by the income tax department or any other designated authority. The extension of the deadline will come as relief for those individuals who want to settle their tax disputes without paying additional 10% penalty and interest. The extension will also give a breather to those individuals who were yet to do a cost-benefit analysis of the scheme and decide whether to opt for it or not.