The Union Cabinet on Wednesday gave its nod for amendment of the Direct Tax Vivad se Vishwas Bill, 2020, so that its scope can be widened to cover litigation pending in various debt recovery tribunals (DRTs).

Also, in search and seizure procedures, where the recovery is up to ₹5 crore, this scheme can now be availed of once the Bill is amended.

The move to make these changes in the Bill comes two days after Finance Minister Nirmala Sitharaman met industry representatives to hear their views on the direct tax dispute resolution scheme, which provided taxpayers with a lucrative option to pay outstanding taxes and get a waiver of interest and penalty.

With over ₹9-lakh crore of direct taxes locked up in litigation, the government is keen to ensure the success of this scheme.

This Bill, which aims to provide for resolution of disputed direct taxes, was introduced in the Lok Sabha on February 5, within a few days of its announcement in the Budget.

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In the form introduced in the Lok Sabha, the Bill provided taxpayers a lucrative option, allowing them to settle 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 was pending or had been paid. It provided for waiver of interest, penalty and prosecution.

Now, the government proposes to widen the scope of the Bill and cover cases pending before debt recovery tribunals and also certain search and seizure cases.

Union Minister for Information and Broadcasting Prakash Javadekar told reporters after the Cabinet meeting that it has been decided to cover disputes pending in DRTs also. He said that cases involving over ₹9-lakh crore of direct taxes were pending in litigation in various forums.

Javadekar expressed the hope that people would take advantage of the scheme to settle the tax disputes before March 31, 2020, as 10 per cent more will be charged for settlement of disputes after that date.

Experts’ take

Commenting on the development, Neeru Ahuja, Partner, Deloitte India, said: “The need of the hour is to allow liberal and maximum coverage of this scheme so that more and more taxpayers can take advantage. This will also allow the government to end litigation and collect much-needed taxes. It’s a win-win for both stakeholders”

SR Patnaik, Head, Taxation, at law firm Cyril Amarchand Mangaldas & Co, said: “This is an important development and may go a long way to reduce the total number of outstanding tax-litigation disputes. It is also expected that the government may relook at the scheme and try to further expand its scope because many deserving cases are not getting included in it.”

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