Vivad se Vishwas: IT dept begins implementation, taxpayers await rules

Topics Income tax | Direct taxes

Union Finance Minister Nirmala Sitharaman during a press conference after a cabinet meeting. PTI
The income tax department on Wednesday kick-started implementation of the direct tax dispute resolution scheme, Vivad se Vishwas, by notifying the ‘designated authorities’ who will accept applications and issue orders under each jurisdiction. 

However, with barely 14 days to avail full benefit of the scheme, the rules and forms for taxpayers are still awaited, making the timeline appear unrealistic.

Besides, tax experts pointed out that with a majority of workforce functioning from home due to the coronavirus pandemic, it was impossible to meet the March 31 deadline (without additional payment) under the scheme.

The Central Board of Direct Taxes (CBDT) on Wednesday directed the principal chief commissioners to ‘immediately’ notify field officers as ‘designated authorities.’  Principal chief commissioner of income tax Delhi notified 13 commissioners of income tax as designated authorities. The move comes a day after the scheme was notified post President’s assent.  

The scheme is open till June 30 and an additional 10 per cent needs to be paid for taxes paid after March 31. There are more than 400,000 such cases eligible to avail of the scheme, and they involve at least Rs 9.3 trillion.

The designated authorities will determine the amount payable within 15 days of receiving the declaration and grant a certificate of amount to be paid. 

The declarant will have to deposit the money within 15 days of determining the tax liability.

This gives little time to assessees to pay up by March 31. The CBDT had, however, clarified in the FAQs issued on Thursday that “15 days is (the) outer limit”. 

A clarification said the designated authorities would be instructed to grant a certificate at an early date, enabling the appellant to pay the amount on or before March 31, 2020, so that the entity could take the benefit of the reduced payment.

Shailesh Kumar, director, Nangia Andersen Consulting, said, “Though, this is the first step towards implementation of the scheme, a lot of other work still needs to be done, viz. notification of rules, forms for taxpayers for making the necessary application, etc.” 

He added it was also important to see how swiftly concerned principal chief commissioners of income tax issue necessary notification appointing the ‘designated authority’ on a pan-Indian level.

Kumar added that limited time available before the prescribed due date of March 31 under the scheme and also considering that lot of companies/ taxpayers are now working under ‘work from home’ model due to ongoing ‘corona’ scare, it may be advisable for the government to extend the timelines under this scheme. This is because most taxpayers, who are willing to opt for this scheme, may have sufficient time to do so.” 

Most assesses willing to participate in the scheme are loss-making and wound up firms, having old cases with a piled up interest component.

“With most companies making adjustments to accommodate ‘work from home’ and ensuring smooth functioning of daily activities, participating in Vivad se Vishwas is not a priority at the moment,” said a senior chartered accountant.

Indicating a possible extension, finance minister Nirmala Sitharaman, in her reply in Rajya Sabha on Friday, said that the end date of the scheme will be notified. It will be based on suggestions from assesses and how the implementation of the scheme unfolds.
She was responding to a question that the scheme provides too short a time to assesses to participate in it. 

The Rajya Sabha passed the Bill on Friday and will require President’s assent before it is notified. This leaves assessees barely a fortnight to take part in the process. “However, the Bill authorises the government to notify the end date. Based on how this whole thing is going and suggestions from assesses themselves, the notification will be issued subsequently,” Sitharaman had said.

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