Vivad Se Vishwas Direct Tax Scheme

The Vivad Se Vishwas Scheme 2020 is a Government of India scheme which facilitates easy settlement of income tax disputes. As per the latest notification, the Government of India has extended the deadline for settling tax disputes without paying any interest and penalty to 30th June 2020 from the earlier date of 31st March 2020. The extension has come into effect due to the current lockdown situation to contain the Coronavirus growth in the country. The decision was announced by the finance minister Nirmala Sitaram on March 24th, 2020.

Note: All information has been sourced from the official website of Vivad Se Vishwas Scheme 2020.

What is Vivad Se Vishwas Scheme?

The Vivad Se Vishwas Scheme is a direct tax scheme introduced by the Government of India for settling disputes between taxpayers and the income tax department. The scheme aims to minimize tax-related litigation. Under this scheme, an individual taxpayer can claim full waiver on interest and penalty on the full and final settlement of the disputed tax amount. If an individual taxpayer opts for settlement post 31st March 2020, he/she is required to pay an additional 10% penalty on the disputed tax amount.

Objective of Vivad Se Vishwas Scheme - 2020

Minimize tax-related litigation
Generate revenues for the Government
Assist taxpayers for ending any tax disputes
Facilitate immunity from prosecution
Provide waiver from payment of interest and penalty

Direct Tax Vivad Se Vishwas Bill 2020

The Direct Tax Vivad Se Vishwas Bill 2020 has been passed by the parliament of India
The bill seeks to ease the compliance burden on part of the taxpayer
The bill was introduced in the Parliament on 5th Feb 2020

Salient Features of Vivad Se Vishwas Scheme

The bill defines the following features:

The key dates of opening/closing and payment
The eligibility of a taxpayer
The total amount to be paid for the settlement of the dispute
List of exclusions
Delegated Legislation - Power to make rules, remove difficulty
Date on which the Bill gets the assent of Hon’ble President after being passed by the Parliament
The last date for settling the dispute (30th June 2020)
The last date of payment

Eligibility of Vivad Se Vishwas Scheme

The scheme is applicable for the following:

Appeals, writs, SLPs, arbitration (filed by Department or taxpayer) filed on or before 31st Jan 2020
Orders for which time for filing appeal has not expired on 31st Jan 2020
Cases pending before Dispute Resolution Panel (DRP)
Cases where DRP issued direction on or before 31st Jan 2020 but order has not yet been passed
Cases where assesses filed revision application under section 264 on or before 31st 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) in relation to an assessment or reassessment order OR 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 tax on enhancement notice

Payment Terms of Vivad Se Vishwas Scheme

Payment made on or before	Appeal, writ, SLP, arbitration relates to disputed tax	Appeal, writ, SLP, arbitration relates only to disputed penalty or interest or fee
31st March 2020	100% of the disputed tax (125% in search cases) [waiver of interest & penalty]	25% of the disputed penalty or interest or fee
End date (likely to be 30th June 2020)	110% of the disputed tax (135% in search cases) [waiver of interest & penalty]	30% of the disputed penalty or interest or fee

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Exclusions of Vivad Se Vishwas Scheme 2020

The exclusions under this bill are:

Search cases if the disputed tax amount is greater than Rs. 5 Crores
Cases initiated by the department under Income-tax Act, 1961 or under Indian Penal Code
Cases involving undisclosed foreign income and assets
Cases completed on the basis of information received from foreign jurisdiction
Cases where person is notified under Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992 / Detained under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974
Cases covered under Narcotic Drugs and Psychotropic Substances Act, Unlawful Activities (Prevention) Act, Prevention of Corruption Act, Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, Prevention of Money Laundering Act, Prohibition of Benami Property Transactions Act

Consequences under Vivad Se Vishwas Scheme

This includes the following instances:

Consequent to such declaration and on fulfillment of conditions, all appeals, writs, SLPs, arbitration to be withdrawn (both by taxpayer and by department)
Immunity to be granted from levy of interest, penalty and institution of any proceeding for prosecution for any offence under the Income-tax Act in respect of matters covered in the declaration
In case of excess payment before filing declaration, refund shall be issued without interest

Vivad Se Vishwas Scheme - Delegated Legislation

The CBDT is proposed to be given power to issue such orders, instructions and directions to the income-tax authorities for the proper administration of the Act
The Central Government is proposed to be given power to make rules for carrying out provision of this scheme
The Central Government is proposed to be given power to remove difficulties by issuing appropriate orders not inconsistent with the scheme