The declarant has to deposit the disputed tax amount within 15 days of the determination of the tax liability by a designated authority.
The clarification gives little time to assessees to square up by March 31 because the Bill is yet to be enacted.
These clarifications were part of the 55 frequently asked questions (FAQs), released by the Central Board of Direct Taxes (CBDT) on Thursday.
The appellant must choose to settle all issues and then only would he or she be eligible to file a declaration, the FAQs said.
Under the scheme, taxpayers will get a refund of the excess of the tax payable under the scheme in case one has paid the disputed tax during litigation.
“The appellant will be entitled to refund without interest under Section 244A of the Act,” one of the clarifications said.
The Lok Sabha on Wednesday passed the Bill. Being a money Bill, it does not require the Rajya Sabha’s nod. However, it will go to the Upper House, which can recommend changes, but it will be up to the Lok Sabha to accept those or not. After that it would go to the President for assent before notification. This would leave assesses with barely a fortnight to avail of the maximum benefit from the scheme.
While a waiver of interest and penalty will be given in the case of payment by March 31, an additional 10 per cent of the disputed amount will have to be paid after that till June 30.
There are more than 400,000 such cases, involving at least Rs 9.3 trillion.
The FAQs further said the scheme would also cover tax deducted at source (TDS) and tax collected at source (TCS) disputes that are pending in appeal.
“If there is no dispute related to TDS or TCS and there is delay in depositing such TDS/TCS, then the dispute pending in appeal related to interest levied due to such delay will be covered under Vivad se Vishwas,” it added.
Although matters pending before the Authority of Advance Ruling (AAR) are not covered under the scheme, the cases against which an appeal has been filed can come under it and the AAR order has determined the tax liability.
“To illustrate, if the AAR has given a ruling that there exists Permanent Establishment (PE) in India but the AO has not yet determined the amount to be attributed to such PE, such cases cannot be covered since the total income has not yet been determined,” the Board cited an example.
The FAQs further said where notice for initiating prosecution had been issued with reference to tax arrears, the taxpayer had a choice to compound the offence and opt for Vivad se Vishwas. However, the scheme will not cover cases where prosecution has already been instituted and is pending in court.
It further clarified the declarant would be required to withdraw appeals over tax disputes at the time of paying the amount determined by the designated authority and not at the time of filing a declaration under the scheme.
The scheme offers a waiver of interest, penalty and prosecution for settling disputes pending before the commissioner (appeals), income tax appellate tribunals (ITATs), high courts, or the Supreme Court as of January 31, 2020. It also offers a 50 per cent discount on the principal tax amount where an appeal has been filed by the I-T department.
Amit Singhania, partner, Shardul Amarchand Mangaldas & Co, said the applicability of secondary adjustment in the case of transfer pricing disputes overshadowed the benefits expected out of the scheme.
Rakesh Nangia, chairman, Nangia Anderson Consulting, said there was very little time for taxpayers to opt for the scheme and also for the tax authorities to evaluate all the applications.