Taxmen to ease rules for amnesty scheme, help assessees to meet deadline

Given the time constraints, the finance ministry is fine-tuning rules to make the Vivad se Vishwas scheme accommodative for those declaring money involved in disputes and paying tax on them over just a fortnight in March.

Besides instructing officers with the job of clearing applications online within a day once the Vivad se Vishwas Bill is enacted in March, the tax department will allow assessees to join the scheme without waiting for the withdrawal of cases from various judicial bodies. 

However, arranging for cash and getting timely company approval are among the key challenges assessees are facing. The scheme offers a waiver of interest, penalty, and prosecution for settling tax disputes on amounts that were due up to January 31 this year. But payments have to be made by March 31 and an additional 10 per cent will be levied in case of payments made after March 31 but by June 30.

There are more than 400,000 pending cases, involving Rs 9.3 trillion.

Declarants will need to attach the application on withdrawing cases from the commissioner (appeals), the income tax appellate tribunal, high court, or Supreme Court, along with the Vivad se Vishwas form.

“Assessees and the department need to withdraw cases from judicial levels, which may take time. 

Therefore, we have decided that only applications for withdrawal will be enough to participate, while the actual withdrawal may take its own time,” said a government official. This will be part of the rules of the scheme, which will be released once the Bill is passed by Parliament and the Act is notified. The earlier version of the Bill stated the designated authority would determine the amount payable within 15 days of declaration. However, an official said 15 days would be only for challenging cases, whereas routine cases may get clearance electronically within a day or two.

Under pressure to meet the challenging revenue collection target for the fiscal year, the Central Board of Direct Taxes (CBDT) informed field formations that their performance in Vivad se Vishwas would be part of the appraisal process for 2019-20 (FY20) and would be a key determinant in their ‘future postings’.

“Details of the number of disputed cases, the amount involved in disputed cases as well as the number of cases resolved, and the amount collected under the scheme may be reported in the self-appraisal shall be an important factor in determining their future postings,” the communication said.

Assessees may now face pressure from the commissioner of income tax (appeals), or CIT(A), to withdraw cases.

“We foresee taxpayers being nudged to settle their cases, especially at the CIT(A),” said Amit Maheshwari, managing partner, Ashok Maheshwary & Associates.

Despite scaling down the direct tax collection target to Rs 11.7 trillion in the Revised Estimates, from Rs 13.35 trillion in the Budget Estimates for FY20, achieving it will require 19 per cent growth in the last quarter of the year. But, experts are not convinced that the scheme will be a success, with most finding it unattractive and the window too short to be realistic. They said it would be nearly impossible to get nod and arrange for cash in such short time.

A senior CBDT official ruled out extending the March 31 deadline (without additional 10 per cent penalty) and said companies should start getting approval in February and apply the moment the scheme is rolled out in March.

Rajat Mohan, partner, AMRG & Associates, said: “Arranging for funds on short notice would prove to be a challenge for taxpayers, especially when the economy is going through the worst slowdown in modern history and the central bank has still not improved liquidity.” 

Neeru Ahuja, partner, Deloitte India, too said the time window was short. Besides, taxpayers are concerned that the settlement will happen year-wise and one year may have several issues, some of which they are willing to give up and some not. This may cause people to hold back from opting for the scheme, she said. In an attempt to make the scheme attractive, the Union Cabinet last week expanded its scope to cover litigation pending in arbitration fora and debt recovery tribunals.