Direct Tax Vivad se Vishwas Act, 2020: Highlights

Introduction

The Finance Minister introduced the Direct Tax Vivad se Vishwas Bill, 2020 in the Lok Sabha on February 5, 2020. The Bill seeks to establish a mechanism for resolving the pending tax disputes in India. The Bill states that the taxpayers shall only be required to pay the disputed tax amount and shall get a complete waiver of interest or any kind of prosecution if the individual makes the payment before the date specified by the central government.

Key Highlights

The Bill defines the appellants as any income tax authority or a person whose appeal has been pending before any appellate forum as on January 31, 2020. The Supreme Court, the High Courts, the Income Tax Appellate Tribunals and the Commissioner (Appeals) have been designated as the appellate forums.

The resolution mechanism, as proposed by the Bill, allows an appellant to file a declaration to the designated authority till June 30, 2020 which was extended from March 31, 2020 by the government due to the Covid-19 outbreak in India. The designated authority will determine the amount payable against the dispute within fifteen days of the date of receipt and the appellant is required to make the payment within fifteen days of the receipt of such certificate. The amount paid by the appellate shall not be refundable. The determination of the amount shall depend on the nature of the dispute i.e. it is related to payment of tax, or payment of interest, penalty etc. It is important to note that appellate shall have to make an additional payment in case he or she fails to make the payment before June 30, 2020. Further, the appellant is required to give an undertaking waiving his rights if he or she wants to seek a remedy relating to that dispute under any law. The designated authority cannot levy any interest or penalty after the dispute has been settled. However, the Bill provides certain disputes like a dispute where the prosecution was initiated before the declaration was filed, which involves an individual who has been convicted or is being convicted for offences under any law and disputes related to undisclosed foreign income and assets. With these provisions, the Bill seeks to resolve 4.83 lakh tax disputes worth 9.32 lakh crore which are currently pending in Income Tax Appellate Tribunal, High Courts, Supreme Court etc.