Vivad Se Vishwas: Govt nets Rs 54,000 crore, half of it from PSUs
According to PC Mody, chairman of the Central Board of Direct Taxes (CBDT), the Centre’s tax settlement scheme Vivad Se Vishwas has settled approximately a third of all direct tax conflicts and netted Rs 54,005 crore in tax revenue, 51 per cent of which comes from central PSUs.
In response to an appraisal or reassessment order, the Vivad Se Vishwas system allows for the resolution of contested tax, disputed interest, disputed penalty, or disputed payments. The Vivad Se Vishwas system can be revolutionary to the dispute resolution framework in the country.
According to PC Mody, chairman of the Central Board of Direct Taxes (CBDT), the Centre’s tax settlement scheme Vivad Se Vishwas has settled approximately a third of all direct tax conflicts and netted Rs 54,005 crore in tax revenue, 51 per cent of which comes from central PSUs.
Despite the fact that the hopes for the scheme were much higher — the government had originally set a target of collecting Rs 2 lakh crore by the end of March 2020, but the Covid-19 pandemic threw the estimates off — the government still considers the scheme a success, citing that a 1998 scheme only managed to collect Rs 739 crore with the resolution of a few thousand disputes, and another in 2016 managed to collect Rs 2 lakh crore with the resolution of a few thousand disputes.
“The numbers suggest that the scheme has been “very successful” in terms of reduction of legacy disputes. With assessments happening in a fairer and objective manner now, disputes generation will be less going forward,” Mody said.
According to the top tax official, 1,33,837 Form-1s were filed, involving 1,48,690 conflict declarations and a total of Rs 1,00,437 crore in contested tax. The central PSUs filed 1,385 forms involving Rs 35,109 crore in contested revenue, of which Rs 27,718 crore (nearly 79 per cent) was paid by these individuals. Individuals and private companies submitted 1,31,582 forms of contested taxes totalling Rs 63,713 crore, to which they charged Rs 25,267 crore or 40%. State PSUs filed 870 forms of contested taxes totalling Rs 1,615 crore, of which they paid Rs 1,020 crore (or 63%).
There were 5.1 lakh direct tax dispute cases pending as of January 31, 2020, with tax demands totalling Rs 19.55 lakh crore. There were 2,676 pending cases involving central PSUs, with taxes in lawsuits totalling Rs 4.3 lakh crore, while there were 6,409 pending cases involving state PSUs, with taxes totalling Rs 90,895 crore. As of January 31, 2020, there were approximately 5 lakh tax disputes between persons and corporate bodies totalling Rs 14.3 lakh crore.
On March 17, 2020, the Direct Tax Vivad se Vishwas Act, 2020, was passed to resolve direct tax disputes that had been lodged in various appellate forums. The deadline for filing a deceleration and paying under the direct tax dispute resolution system was March 31 and April 30, respectively.
In regards to the matters covered in the declaration, the taxpayer is given protection from interest, punishment, and the institution of any action for a conviction for any offence under the Income Tax Act.
In response to an appraisal or reassessment order, the Vivad Se Vishwas system allows for the resolution of contested tax, disputed interest, disputed penalty, or disputed payments. Collection of 100 per cent of the contested tax plus 25% of the disputed levy, debt, or charge resolves the conflict.
The policy, which was announced in the Budget last year, states that if the income tax department files an appeal or loses on a question, the assessee must pay half of the contested tax, with the penalty and interest waived.
When the issue is only about penalty and interest, the taxpayer only needs to pay 12.5 per cent of the contested sum in these situations.
If the assessee files a lawsuit in a higher forum, they must pay 100 per cent of the contested tax (125 per cent of the disputed tax in quest cases), with liability and interest waived. When the conflict is purely about penalty and interest, you must pay 25% of the contested penalty and interest.
