Explained: ‘Vivaad se Vishwas’ scheme in India’s tax mechanism
New Delhi, Feb 05: The Union Finance Minister Nirmala Sitharaman on Wednesday will table a Bill to give effect to her budget announcement of 'Vivaad se Vishwas' (dispute to trust) in India's tax mechanism in the Lok Sabha.
This comes four days after she announced the Union Budget 2020, where she introduced a scheme to resolve a staggering number of pending direct tax cases.
What is Direct Tax 'Vivad Se Vishwas' Bill, 2020?
The Bill FM is going to bring in the Lower House of Parliament is named as Direct Tax 'Vivad Se Vishwas' Bill, 2020. The bill focus for resolution of disputed tax and related matters.
In the Union Budget 2020, that was held on February 1, she announced, "Vivad se Vishwas" scheme to resolve 4,83,000 direct tax disputes pending in various tribunals.
This unique scheme will offer waivers of penalty and interest if the disputed amount is paid before March 31, 2020.
In her long Budget speech, Sitharaman had said that in 2020, she proposed to bring a scheme similar to the indirect tax, 'Sabka Vishwas', for reducing litigation even indirect taxes.
The "Sabka Vishwas" was proposed by her in her first Budget, presented in 2019, that aim for legacy dispute resolution scheme for litigation related to excise and service tax payments.
According to this new tax bill, the "Vivad Se Vishwas" scheme, that will be brought by her, a taxpayer would be required to pay only the amount of the disputed taxes and will get a complete waiver of interest and penalty provided he pays by March 31, 2020.
On Wednesday, both the Houses of the Parliament will continue to have a debate session on the President's speech. However, the Citizenship (Amendment) Act (CAA) and Shaheen Bagh protests had been the prime subjects of the debate with the Opposition and the ruling side hurling barbs at each other.
According to the experts, the "Vivad Se Vishwas" scheme will cover all tax litigation, including those against individuals.
The founder of tax advisory firm Transaction Square, Girish Vanvari said that several companies and individuals who are facing litigation can use the new scheme to settle the cases.
He also added that the government will be able to monetise the amount of money that is presently stuck in litigation over the years as in several cases the interest and penalty come to more than 100 per cent of the tax demand.
Experts also believe that this scheme could also be a big draw for the MNCs that could resolve some legacy tax issues.
The industry trackers informed that already several firms have started reaching out to their tax advisers and lawyers to check if they could take advantage of the "Vivad Se Vishwas" scheme.