Broadening of Eligibility under ‘Vivad Se Vishwas Scheme’
The Government of India responded to COVID-19 with alacrity by announcing certain relaxation in tax compliances and reduction of interest exposure. However, the economic impact of COVID-19 and the consequent impact has also brought about a significant impact on the revenue collections of the Government, especially the “Vivad Se Vishwas scheme” announced in the Union Budget 2020.
The amnesty scheme faces challenges as many taxpayers are struggling with liquidity and business continuance. Meanwhile, the department has broadened the scheme for the taxpayers which is a very important development.
Eligibility of the scheme widened
Earlier The scheme was not available to Cases where the prosecution has been initiated by the department under Income-tax Act or under Indian Penal Code
The CBDT, through a FAQ has clarified vide Circular 9/2020 dated 22nd April 2020 that “ where the prosecution has instituted with respect to an assessment year, the assessee is not eligible to file declaration for that assessment year under Vivad se Vishwas, unless the prosecution is compounded before filing the declaration”
There are various stages of prosecution, firstly there is a show-cause notice, then the assessee can apply for compounding and when the assessee does not approach for compounding, the tax authorities then can institute the prosecution proceedings which essentially mean that a complaint is filed in the District Court.
This is certainly a relief as this will open gateway for many assessees to come under the scheme by filing a compounding application as against the earlier position when the scheme was not available in all cases where prosecution was initiated.
Next Steps
The department has been issuing various clarification thereby revising scheme to clear several doubts of taxpayers, enabling them to take a practical call for settling disputes and thus, seek finality of outcomes in those cases. Taxpayers can avail of significant leverage on the waiver of interest and penalty being offered under the scheme.
We, at MBG Corporate Services, have an in-depth understanding of the scheme and can help taxpayers to navigate through this difficult and challenging time.
Please connect with us if you would like to discuss the next steps.
Last Updated: 30th April 2020
This article is contributed by:
Manoj Pandey
Partner, International Taxes
Tag: Vivad se Vishwas