Budget 2020: In line with scheme for indirect taxes, window for direct tax dispute resolution

Written by Aashish Aryan , Aanchal Magazine | New Delhi | Updated: February 2, 2020 4:57:12 am

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“Those who avail this scheme after 31st March, 2020 will have to pay some additional amount. The scheme will remain open till 30th June, 2020,” Sitharaman said.

After a dispute resolution scheme for indirect taxes, Finance Minister Nirmala Sitharaman Saturday announced a direct tax amnesty scheme called “Vivad Se Vishwas” with a nearly 60-day window to clear all pending dues without paying interest and penalty. After the March 31 deadline, the rules of the scheme will change to allow taxpayers to avail the resolution under the scheme, but only after paying “some additional amount”, for which the details are not known yet.

Through the new scheme, the government aims to resolve disputes with taxpayers in nearly 483,000 direct tax cases pending at various legal and quasi-legal bodies.

Under the scheme, Sitharaman said any taxpayer currently in dispute with the government over the pending dues will be allowed to pay just the principal amount. There will be a complete waiver of interest and penalty, provided the taxpayer pays such amount by March 31, the finance minister said, adding that the scheme would remain open till June 30.

Explained

Aims to resolve over 4L cases

Through the new scheme, the government aims to resolve disputes with taxpayers in nearly 4,83,000 direct tax cases pending at various legal and quasi-legal bodies. Under the scheme, any taxpayer currently in dispute with the government over the pending dues will be allowed to pay just the principal amount. There will be a complete waiver of interest and penalty, provided the taxpayer pays such amount by March 31, the finance minister said, adding the scheme would remain open till June 30. However, those who avail this scheme after March 31, 2020 will have to pay some additional amount. The scheme will remain open till June 30, 2020.

“Those who avail this scheme after 31st March, 2020 will have to pay some additional amount. The scheme will remain open till 30th June, 2020,” Sitharaman said.

The direct tax amnesty scheme comes at a time when the government’s direct tax collections have taken a hit. The government’s gross direct tax collections had fallen 5 per cent year on year till January 15 this financial year. The Budget has pegged gross tax revenues for 2020-21 at Rs 24.23 lakh crore, up 12 per cent from Rs 21.63 lakh crore in current fiscal year.

Around Rs 6.38 lakh crore is expected to be mopped up from personal income tax in 2020-21, a 14.13 per cent increase over Rs 5.59 lakh crore earned in 2019-20. Corporate tax revenue is budgeted to increase 11.63 per cent to Rs 6.81 lakh crore in 2020-21 from Rs 6.10 lakh crore in current fiscal.

The government had missed its gross tax revenue collection targets for the ongoing financial year by as much as Rs 2.97 lakh crore.

The Budget Estimates for gross tax revenue in 2019-20 was Rs 24.61 lakh crore, while in revised estimates it is pegged at Rs 21.63 lakh crore. The government has also missed its direct tax collection target in the current financial year by Rs 1.65 lakh crore.

In the budget for last fiscal, Sitharaman had announced the legacy dispute resolution scheme for indirect tax disputes, to “allow quick closure” of the litigation pertaining to the pre Goods and Services Tax regime.

Under the indirect tax amnesty scheme, nearly 73 per cent of the total eligible taxpayers had committed to pay tax dues of Rs 30,627 crore under the scheme.

The amount declared under the scheme though stands at just 8.5 per cent of the total amount locked in litigation at Rs 3.6 lakh crore for 1.83 lakh cases of central excise and service tax at various quasi-judicial, appellate and judicial forums put together.

To further ramp up the trust between taxpayers and the administration, Sitharaman also said that the Central Board of Direct Taxes (CBDT) will adopt a “taxpayer charter”, which will work towards reducing the harassment of taxpayers. The first step in this regard would be the adoption of a “faceless appeal” mechanism along the lines of “faceless assessment”.

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