As Vivad Se Vishwas scheme draws to close, tax officers face the heat

Vivad Se Vishwas scheme allows the waiver of interest, penalty, and prosecution for settling tax disputes due up to January 31, 2020

With three weeks to go before the Vivad Se Vishwas direct tax dispute resolution scheme window closes, Finance Secretary Ajay Bhushan Pandey and the Central Board of Direct Taxes (CBDT) Chairman P C Mody pulled up tax officers for the dismal declarations, in a meeting held last week.

It was argued that the declarations were 'not even 10 per cent' of the potential level, while the final payments made after the declarations remained ‘dismal.’ Besides, officers were urged to reach out to central public sector enterprises (CPSEs) to settle disputes under the scheme.

“Tax officers were told that those displaying subpar performance would be held accountable since the scheme was being monitored by Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman. They were asked to hold webinars and keep the lines of communication open with the assesses where eligible appeals were pending, and persuade them to come under the scheme,” said a government official.

Vivad Se Vishwas scheme was announced in the Union Budget presented on February 1. It allows the waiver of interest, penalty, and prosecution for settling tax disputes due up to January 31, 2020. While the declarations under the scheme have to be filed by December 31, 2020, the government had in October extended the deadline for making payment by three months till March 31, 2021, in view of the ongoing Covid-19 pandemic.

CBDT chairman will undertake a weekly review meeting on the issue every Friday. A daily report of all forms will be sent to the CBDT.

According to government estimates, there are more than 400,000 such cases eligible to avail of the scheme, involving at least Rs 9.3 trillion. But, as of November 17, the government collected Rs 72,480-crore tax through the scheme. 

A total of 45,855 declarations were filed under the scheme, involving a disputed tax demand of Rs 31,734 crore till November 17. 

As for CPSEs, tax disputes worth Rs 1 trillion are being settled under the scheme.

“Principal chief commissioners of income-tax (I-T) have been asked to submit a note to public sector enterprises that have not responded positively to the scheme,” said the official quoted earlier.

However, he added that in most dispute cases with CPSEs, they were asked to pay tax in full and get a refund on winning the case. This may not be a big number from a collection perspective under the scheme.

With a steep revenue collection target for the fiscal year, the government is examining ways to make the scheme a success.

In a set of frequently asked questions issued on Friday, the CBDT said entities filing declaration under the scheme could revise them till the time tax authorities issued certificates mentioning details of tax arrears and the amount payable.

The net direct tax collection at Rs 4.09 trillion as of November 30 is merely 31 per cent of the target of Rs 13.19-trillion estimated in the Budget for 2020-21.

The scheme provides for settlement of disputed tax, disputed interest, disputed penalty or disputed fee in relation to an assessment or reassessment order on payment of 100 per cent of the disputed tax and 25 per cent of the disputed penalty or interest or fee.

The taxpayer is granted Immunity from levy of interest, penalty, and institution of any proceeding for prosecution for any offence under the I-T Act in respect of matters covered in the declaration.

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