The payment of the disputed amount will be halved under the Vivad se Vishwas scheme in cases where the appeal has been filed by the Income-Tax Department.

The scheme was announced in the Budget to provide a mechanism for the resolution of pending I-T disputes. Subsequently, the Direct Tax Vivad Se Vishwas Bill was introduced in the Lok Sabha. The Union Cabinet recently approved some amendments to the Bill, which are expected to be made during the consideration and passage of the Bill when the Lok Sabha resumes its Budget session early next month.

Two kinds of appeal

The Bill intends to bring both kinds of appeals — those filed by taxpayers and those filed by the I-T Department (or when the Department has lost a case). For the first kind of appeal, if the payment is made by March 31, then the declarant will need to pay the full amount of the disputed tax (and 125 per cent of the disputed tax in cases related to search). There will be no interest or penalty. If the dispute relates to only to penalty, interest or fee, then only 25 per cent of it is to be paid.

However, this amount will be halved if the payment is made by March 31 under the second category of appeal. Here, the declarants will need to pay 50 per cent of the disputed tax (62.5 per cent in cases related to searches). The penalty and interest will be waived. If the matter involves only the interest, penalty or fee, then the declarants will be required to pay only 12.5 per cent of it.

Payments made later

If the payment is made after March 31 but by June 30, then, for the first kind of appeal, the declarant will need to pay 110 per cent of the disputed tax (135 per cent in case of searches). There will be penalty and interest. If the dispute is only on the penalty, interest or fee, then 30 per cent of it will be required to be paid.

For the second type of appeal, in case the payment is made after March 31 but by June 30, then the declarant will need to pay 55 per cent of the disputed tax (67.5 per cent in search-related cases). There will be no interest or penalty. If appeals are related to the disputed penalty, interest or fee, only 15 per cent of it needs to be paid.

Nil precedence

The scheme prescribes immunity from the institution of any proceeding for prosecution for any offence under the Income-Tax Act in respect of matters covered in the declaration. However, the filing of declaration will not set any precedence. Neither the Department nor the taxpayer can claim in any other proceeding that they had conceded their tax position by settling the dispute.

As on November 30, 2019, there were about 4.83 lakh appeals pending at various levels involving tax arrears to the tune of about ₹9.32-lakh crore. The Centre hopes the new scheme will bring down the number of pending cases and result in some portion of the locked revenue being realised.