Direct Tax Vivad se Vishwas Act 2020 gets notified, Download Copy here

Direct Tax Vivad se Vishwas Act, 2020 (Downloadable PDF)

The Direct Tax Vivad se Vishwas Act, 2020 has received the assent of the President on the 17th March, 2020.

The Act provides for resolution of disputed tax and for matters connected therewith or incidental thereto.

Earlier, Union Finance Minister, in her Budget 2020-21 had proposed a Direct Tax Amnesty Scheme to quickly end pending litigations.

CBDT has already started building a database for the said announcement. In a recent communication sent to all Principal Chief Commissioners of Income Tax (CCA),  CBDT has sought the various data of the litigations pending at High Court level as on 31st January, 2020.

(a) The provisions of the Bill shall be applicable to appeals filed by taxpayers or the Government, which are pending with the Commissioner (Appeals), Income tax Appellate Tribunal, High Court or Supreme Court as on the 31st day of January, 2020 irrespective of whether demand in such cases is pending or has been paid;

(b) the pending appeal may be against disputed tax, interest or penalty in relation to an assessment or reassessment order or against disputed interest, disputed fees where there is no disputed tax. Further, the appeal may also be against the tax determined on defaults in respect of tax deducted at source or tax collected at source;

(c) in appeals related to disputed tax, the declarant shall only pay the whole of the disputed tax if the payment is made before the 31st day of March, 2020 and for the payments made after the 31st day of March, 2020 but on or before the date notified by Central Government, the amount payable shall be increased by 10 per cent. of disputed tax;

(d) in appeals related to disputed penalty, disputed interest or disputed fee, the amount payable by the declarant shall be 25 per cent. of the disputed penalty, disputed interest or disputed fee, as the case may be, if the payment is made on or before the 31st day of March, 2020. If payment is made after the 31st day of March, 2020 but on or before the date notified by Central Government, the amount payable shall be increased to 30 per cent. of the disputed penalty, disputed interest or disputed fee, as the case may be.

Disputed Tax Calculation Formula

The disputed tax in most of the cases largely means the total tax demanded minus the tax on income/additions appealed against 

As per the said Bill, “disputed tax” in relation to an assessment year would mean

(a) tax determined under the Income-tax Act, 1961 in accordance with the following formula—

(A – B) + (C – D) where,

A = an amount of tax on the total income assessed as per the provisions of the Income-tax Act, 1961 other than the provisions contained in section 115JB or section 115JC of the Income-tax Act, 1961 (herein after called general provisions);

B = an amount of tax that would have been chargeable had the total income assessed as per the general provisions been reduced by the amount of income in respect of which appeal has been filed by the appellant;

C = an amount of tax on the total income assessed as per the provisions contained in section 115JB or section 115JC of the Income-tax Act, 1961;

D = an amount of tax that would have been chargeable had the total income assessed as per the provisions contained in section 115JB or section 115JC of the Income-tax Act, 1961 been reduced by the amount of income in respect of which appeal has been filed by the appellant:

Provided that where the amount of income in respect of which appeal has been filed by the appellant is considered under the provisions contained in section 115JB or section 115JC of the Income-tax Act, 1961 and under general provisions, such amount shall not be reduced from total income assessed while determining the amount under item D:

Provided further that in a case where the provisions contained in section 115JB or section 115JC of the Income-taxAct, 1961 are not applicable, the item (C – D) in the formula shall be ignored:

Provided also that in a case where the amount of income, in respect of which appeal has been filed by the appellant, has the effect of reducing the loss declared in the return or converting that loss into income, the amount of disputed tax shall be determined in accordance with the formula specified in sub-clause (i) with the modification that the amount to be determined for item (A – B) in that formula shall be the amount of tax that would have been chargeable on the income in respect of which appeal has been filed by the appellant had such income been the total income;

(b) tax determined under the section 200A or section 201 or subsection (6A) of section 206C or section 206CB of the Income-tax Act, 1961 in respect of which appeal has been filed by the appellant.

Effect of declaration:

Upon the filing the declaration under the Scheme, appeal pending before the ITAT or Commissioner (Appeals), in respect of the disputed income / interest/penalty/fee/tax arrear shall be deemed to have been withdrawn. For pending appeal/writ petition before High Court or the Supreme Court the declarant shall withdraw it.

Immunity

The assessee shall get Immunity from initiation of proceedings in respect of offence and imposition of penalty in respect to tax arrear.

No Refund of amount paid

Any amount paid in pursuance of a declaration made shall not be refundable under any circumstances.

With the passing of Direct Tax Vivad se Vishwas Bill, 2020 by the Lok Sabha on 4th March, 2020 it has now become the Direct Tax Vivad se Vishwas Act, 2020

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