Coronavirus outbreak may delay roll-out of Vivad se Vishwas scheme

Vivad se Vishwas, the government’s flagship scheme for resolving direct tax disputes, may get an extended deadline beyond March 31 on account of the coronavirus outbreak and a late notification, which is still to come. Income-tax (I-T) officers are saying most people will need time to arrange for funds to participate in the scheme and coronavirus will make it tougher for some firms, and many at their global headquarters are shut temporarily.

The Direct Tax Vivad se Vishwas Bill was passed by the Lok Sabha on Wednesday. Being a money Bill, it does not require the Rajya Sabha’s nod. However, it will go to the Upper House, which can recommend changes, but it will be up to the Lok Sabha to accept those or not. After that it would go to the President for assent before notification. This would leave assessees barely a fortnight to take part in the process.

“The chances of an extension are very bright because otherwise assessees will not get a fair chance to participate in the scheme, which will make it unfair to most. Besides, genuine concerns like COVID-19 need to be taken into account,” said a tax officer. Another tax officer said firms were approaching the I-T department on delays in clearances from their headquarters overseas because some were not functioning at full capacity and others were yet to decide whether they wanted to participate in the scheme. 

There are more than 400,000 such cases eligible to avail of the scheme, and they involve at least Rs 9.3 trillion.

As things stand now, tax has to be paid by March 31. Otherwise, the scheme is open till June 30 this year, but an additional 10 per cent of tax dues will need to be paid in the case of payments made after March 31.

The earlier dispute resolution scheme of 2016 provided a seven-month window till December 31, but an additional one-month extension was given. Similarly, the Sabka Vishwas Legacy Dispute Resolution Scheme, for service tax and excise duty, also saw a month’s extension till January 31, 2020.

Amit Maheshwari, partner, AKM Global, said: “It is not an easy decision to take in a lot of cases, especially when it involves multinationals, and hence it would take time. The frequently asked questions have been released recently and we are all racing against time to get this done.”

An extension, he said, would be welcome, considering that coronavirus was affecting Indian offices as well as global/Asian headquarters of several multinationals.

Rajat Mohan, partner, AMRG Associates, said the taxpayers had been given a short window to discuss, deliberate, and decide the fate of tax disputes in various forums and were related to ultra-technical issues. The deadline to pay by March 31 is pushing the envelope too far, he added.

“That has made the scheme lose its lustre. An extension of payment dates by three months without any additional charge of interest seems to be just and would motivate many more taxpayers to opt for the scheme.”

The designated authority (DA) 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 the determination of the tax liability.

The clarification gives little time to assessees to square up by March 31 because the Bill is yet to be enacted.

The Central Board of Direct Taxes had, however, clarified in the FAQs issued on Thursday that “15 days is (the) outer limit”. A clarification said DAs 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 reduced payment.

Disputes relating to wealth, securities transactions, commodities transaction tax, and the equalisation levy are not covered under the scheme.