Reducing income tax disputes in India


The Direct Tax Vivad se Vishwas Bill, 2020

December: Second set of clarifications issued in relation to Vivad se Vishwas Scheme

Second set of clarifications issued in relation to Vivad se Vishwas Scheme
The Central Board of Direct Taxes has issued Circular 21, dated 4 December 2020, to provide second set of clarifications in relation to the Vivad se Vishwas Scheme (VSV Scheme), to provide clarity and resolve certain contentious issues in relation to eligibility of the scheme, computational aspects and procedural / consequential issues.

October: CBDT notifies, amends timelines under Direct Tax Vivad se Vishwas Act, 2020

CBDT notifies, amends timelines under Direct Tax Vivad se Vishwas Act, 2020
The Central Board of Direct Taxes has issued notifications, to notify the last date to file declaration, payment of minimum amount and removal of hardships faced by the taxpayer under the Direct Tax Vivad se Vishwas Act, 2020.

October: Unclog Indian direct tax litigation: No penalty, no interest, and full immunity for settling appeals by 31 December 2020

The Indian Government, to clear the backlog of appeals, has launched a direct tax litigation settlement scheme named the ‘Direct Tax Vivad Se Viswas Scheme’ (VSV scheme). The ‘VSV scheme’ provides taxpayers with an option to put a full stop to the entire litigation process and achieve finality merely by paying the tax component of the dispute. The Indian Government shall waive penalty and interest, and is offering a 50 percent discount to settle revenue appeals and appeals where the taxpayer has a favourable precedent by a higher court. An important aspect is that the ‘VSV scheme’ is not an amnesty scheme and explicitly clarifies that availing this option shall have no precedence value qua the principal issues. Thus, taxpayers can decide to settle their appeals based on an objective comparison of future litigation costs with the cost of availing the settlement option.

April: Re-issuance of circular answering frequently asked questions (FAQs) in relation to Vivad Se Vishwas Scheme

When the Direct Tax Vivad Se Vishwas Bill, 2020 (‘VsV Bill’) was yet to be passed by Parliament, queries were received from stakeholders seeking clarifications in respect of the provisions in the Bill. The government had considered and answered queries by issuing circular 7 of 2020 in the form of FAQs. The clarifications issued were subject to the passing of the VsV Bill in the Parliament and receiving assent of Hon’ble President of India. After passage of the VsV Bill, the CBDT has reissued the circular as Circular no. 9 of 2020 with certain modifications.

The Direct Tax Vivad se Vishwas Rules, 2020 - Procedure and Forms

The Direct Tax Vivad se Vishwas Act, 2020 introduced a dispute resolution scheme, which was applicable to all appeals/petitions filed by the taxpayers or the income tax department, which were pending until 31 January 2020, before any appellate forum. In essence, it offered complete waiver of interest and penalty if the taxpayer agreed to pay the disputed tax amount by 31 March 2020.

In connection with this scheme, the much awaited Rules laying out the forms and procedures for the Direct Tax Vivad se Vishwas Act, 2020 (the VsV Act) were released by the Central Government vide notification dated 18 March 2020. These Rules are titled as “The Direct Tax Vivad se Vishwas Rules, 2020” (the VsV Rules). The Rules have laid out five forms in numerical order for declaration, undertaking, granting of certificate, intimation of payment alongwith proof of withdrawal and issuance of order. As expected, the forms must be filed online under digital signature or through electronic verification code and therefore, taxpayers may still be able to achieve resolution of their tax disputes within the first window, which ends by 31 March 2020 per the VsV Act.

The second window starts from 1 April 2020 until a date to be specified per the VsV Act, (likely to be 30 June 2020 per the finance minister’s Union Budget 2020 speech) In this window, the taxpayer may still be able to settle his disputes and get complete waiver of interest and penalty, subject to paying an additional amount as specified in the VsV Act which in most cases, will be 10 percent of the disputed tax.

The Direct Tax Vivad se Vishwas Bill, 2020

Watch Ashutosh Dikshit, Partner, Deloitte India, sharing his views on the current direct #tax #VivadseVishwas Bill, 2020, along with clarifying what appeals will the #VSV bill address? #litigation

The Direct Tax Vivad se Vishwas Bill 2020: Decoding the rules | 18 March

“The Direct Tax Vivad se Vishwas Bill, 2020” (“the scheme”) is likely to receive the President’s assent today.

Under the scheme, a taxpayer can settle a litigation pending before any forum, as on 31 January 2020, by paying the tax on the disputed income and get a full waiver of interest and/or penalty.

The government has issued answers to Frequently Asked Questions and is expected to announce the rules today.

Please join us for the webcast along with the government representatives to address doubts on the matter.

Speakers for the session

  • S K Gupta, Principal Chief Commissioner of Income Tax, Mumbai
  • Geetha Ravichandran, Chief Commissioner of Income-tax (International taxation), West Zone
  • Deloitte India Subject Matter Experts

India tax litigation settlement scheme: The Direct Tax Vivad se Vishwas Bill, 2020 | 11 March

Encouraged by the success of the Indirect tax dispute resolution scheme, the Finance Minister tabled "The Direct Tax Vivad se Vishwas Bill, 2020" (the scheme) in the parliament on 5 February 2020. The key objective of the scheme is to collect taxes and reduce the number of litigation cases pending before various appellate forums. We discussed: 

  • An overview of the scheme.
  • Procedural aspects of the scheme.
  • Critical business considerations to be evaluated before opting for the scheme.
  • Q&A with PCIT.

Our subject matter experts for the session were:

  • Pragya S Saksena, Principal Chief Commissioner of Income Tax
  • Gokul Chaudhri
  • Karishma Phatarphekar

The Direct Tax Vivad se Vishwas Bill, 2020: Decoding the amended bill and circular

“The Direct Tax Vivad se Vishwas bill, 2020” was tabled on 5 February 2020, in the Lok Sabha, to provide a resolution for pending income-tax disputes. Thereafter, official amendments to the bill were proposed for accommodating the representation received from key stakeholders. However, several aspects of the scheme required clarifications, which the government provided in the form of an amended bill, passed by the Lok Sabha on 4 March, and by way of a circular issued by the Central Board of Direct Taxes (CBDT). The amended
bill was passed by the Rajya Sabha on 13 March 2020. The President of India provided his assent to the bill on 17 March 2020, thus enacting the "Direct Tax Vivad se Vishwas Act, 2020" (Act or VsV scheme).

Reducing income tax disputes in India: Deloitte tax policy paper

The income tax dispute resolution mechanism in India is multi-layered and time consuming, affecting the environment for doing business in India. The country has an extensive tax appeals system that goes up to the Supreme Court of India. However, this system is subject to overuse. The income tax department is a major generator of tax appeals filed under the current dispute resolution procedure.

Vivad se Vishwas Bill, 2020

The Direct Tax Vivad se Vishwas Bill, 2020 (VsV Bill) has been introduced by the Government of India to settle pending direct tax litigations for litigants, and enable the government to collect revenues locked up in litigation. 

Webcast highlights on Vivad se Vishwas scheme | 11 February 2020

Considering the current pendency of over 4,80,000 cases at various Direct Tax Appellate Forums, the Finance Minister tabled ‘The Direct Tax—Vivad se Vishwas Bill 2020’ before the Parliament on 5 February 2020. This is indeed a welcome step to reduce the burden of pending litigation in India. Taxpayers may preferably analyse their appeals and decide whether they wish to avail the scheme.

We had organised a panel discussion through a webcast on ‘Vivad se Vishwas scheme’. This session threw light on the critical nuances of the scheme and also captured some issues which needs further clarification from the government.

Our subject matter experts for the session were:

  • Ashutosh Dikshit
  • Karishma Phatarphekar
  • Vishal Kalra
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