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    Vivad Se Vishwas deal sweetened

    Taxpayers availing of the Vivaad Se Vishwas Scheme will have to pay only half of the disputed amount in cases where the income tax department has filed an appeal, as per recent amendments to the Direct Tax Vivad Se Vishwas Bill that were cleared by the Cabinet.

    The scheme, which was announced in the Budget to resolve pending disputes worth Rs. 9.32 lakh crore in over 4.8 lakh cases, has segregated the terms of payment on the basis of appeals having been filed by the tax department or the taxpayer.

    The Bill, which was introduced in the Lok Sabha during the just-concluded Budget session, is expected to come up for passage in the next session beginning March 2.

    In case of appeals made by the taxpayer, the full amount of disputed tax will have to be paid till March 31, and 25% more in case of search cases. Penalty and interest will be waived. In case the amount of penalty, interest or fee is the matter of dispute, then only 25% of that amount will have to be paid, while the rest will be waived off.

    After March 31, however, the taxpayer will have to pay 10% more on top of the full disputed tax amount, and 35% more in case of search cases. Similarly, in case the amount of penalty, interest or fee is the matter of dispute, 30% will have to be paid. In case of appeals made by the tax department, or where the I-T department has lost a case, 50% of disputed tax will have to be paid, and 12.5% more in case of search cases. Penalty and interest will be waived, here too. In case the amount of penalty, interest or fee is the matter of dispute, then only 12.5% of that amount will have to be paid, while the rest will be waived off.

    After March 31, 2020, however, the taxpayer will have to pay 55% of the full disputed tax amount, and 12.5% more in case of search cases. Similarly, in case the amount of penalty, interest or fee is the matter of dispute, only 15% will have to be paid.

    Another key change that the amendments bring forth is grant of immunity from institution of any proceeding for prosecution for any offence under the Income Tax Act in respect of matters covered in the declaration and also provide immunity from imposition of penalty and levy of interest.

    However, the filing of declaration will not set any precedence, and neither can both parties claim that settlement of the proceedings amounts to conceding of tax position, in any other proceeding. In another amendment, taxpayers can get refunds if the amount in the settlement scheme comes to less than that already paid before availing the scheme. The scheme also gives clarity in cases where the assessing officer has reduced the returned loss, by making addition of income or by disallowing expenditure. 

    The Cabinet had last week announced changes to the scheme, and included cases pending litigation in debt recovery tribunals (DRTs) as well and disputes of search and seizure where the recovery is below Rs 5 crore. The Rs 5 crore limit for search cases will be computed year wise, the amendment revealed, which means a taxpayer can avail the settlement option for the years where the disputed tax is less than Rs 5 crore.