Govt Liberalises Samadhan Norms
In a quiet move, the finance ministry has further liberalised the norms of the Samadhan scheme for indirect taxes by making the necessary amendments in the Finance Bill (No 2) moved on July 17. The new norms now permit an abatement of 50 per cent of the duty along with waiver of interest and penalty.
The earlier proposal in the Finance Bill (No 1) did not permit this and required payment of 50 per cent of the tax arrears, inclusive of interest, penalty or cess.
Essentially, the ministry has effected the changes to bring the Finance Bill in line with what was spelt out by finance minister Yashwant Sinha in his budget speech. "In respect of indirect tax, where in recent years the adjustment of rates has been very sharp, an abatement of 50 per cent of duty would be available along with waiver of interest, penalty and immunity from prosecution," the minister had said in his budget speech. It would, however, mean lower receipts for the government under the scheme, which begins on September 1 and concludes on December 31. According to the ministry, nearly Rs 12,000 crore is locked up in 1.75 lakh disputes involving customs and excise violations.
Under the new norms, the sum that can be possibly recovered by the ministry will be substantially lower. This is because the principal value involved is less than 50 per cent of the disputed sum and the balance is made up of interest and penalty. Internally, the finance ministry estimates to net about Rs 1,500 crore from the Samadhan scheme, designed to unlock tax dues stuck in legal disputes. The new Finance Bill has added two new sub-sections relating to the tax arrears payable under the indirect tax enactment. They are:
In a case where the tax arrears comprise fines, penalties or interest, but do not include duties (including drawback of duty, credit of duty or any amount representing duty) or cess, at the rate of 50 per cent of the amount of such fine, penalty or interest, due or payable as on the date of making a declaration, under Section 88. lIn any other case, at the rate of 50 per cent, of the amount of duties (including drawback of duty, credit of duty or any amount representing duty) or cess due or payable on the date of making a declaration, under Section 88.