Disputes relating to wealth, securities transaction, commodity transaction taxes and equalisation levy will not be covered under 'Vivad Se Vishwas' amnesty scheme.
Issuing a detailed FAQ, the Income Tax department has clarified that the declarant has to deposit the disputed tax amount within 15 days after determination of the tax liability by a designated authority under the scheme.
It also said that a declarant will be entitled to refund in case the amount already paid at the appellate stage is more than the amount payable under the scheme.
In cases where taxpayer's appeals are pending before appellate forums, High Courts and the Supreme Court, he will have the option to settle the dispute on payment of 100 per cent tax (125 per cent in search cases) and get complete waiver of interest and penalty if he pays by March 31.
The liability would go up to 110 per cent (135 per cent in search cases) if the taxpayer pays between April 1-June 30.
Further, where arrears are related to disputed interest or penalty only, then 25 per cent of disputed penalty or interest will have to be paid if the payment is made by March 31, beyond which the same will be enhanced to 30 per cent.
The FAQ clarified that in cases where the revenue department has gone in for appeal, the declarant will have to pay 50 per cent of the disputed tax (62.5 per cent in search cases) and/or 12.5 per cent of the disputed penalty, interest or fee by March 31.
If payment is made after that, the declarant will have to pay 55 per cent of the disputed tax (67.5 per cent in search cases) and/or 15 per cent of the disputed penalty, interest or fee.
The Direct Tax Vivad Se Vishwas Bill was passed by the Lok Sabha on Wednesday.
"The objective of Vivad se Vishwas is to inter alia reduce pending income tax litigation, generate timely revenue for the Government and benefit taxpayers by providing them peace of mind, certainty and savings on account of time and resources that would otherwise be spent on the long-drawn and vexatious litigation process," the I-T department said.
To a question whether wealth tax, security transaction tax (STT), commodity transaction tax (CTT) and equalisation levy would be covered under the scheme, the FAQ said "No. Only disputes relating to income-tax are covered".
As many as 4.83 lakh direct tax cases involving Rs 9.32 lakh crore in disputed taxes are locked in various appellate forums. This amount is the equivalent of 82 per cent of the government's direct tax revenue in FY19.
The scheme will cover appeals pending before the appellate forum [Commissioner (Appeals), Income Tax Appellate Tribunal (ITAT), High Court or the Supreme Court], and writ petitions pending before High Court or the Supreme Court or special leave petitions (SLPs) pending before the SC as on the January 31, 2020.
The scheme can also be availed in cases of search and seizure operations where the cumulative recovery is less than Rs 5 crore and also those which are pending arbitration, but would not cover those cases where the dispute is under the foreign black money act, benami property act and PMLA, among others.
As regards the timeline, the FAQ said that the designated authority will have to determine the amount payable within 15 days of the filing of declaration and thereafter the declarant will have another 15 days time to deposit the tax.
However, the whole exercise has to be completed by March 31, 2020, otherwise the declarant will have to pay additional amount. The scheme would remain open till June 30, 2020.
"It may be clarified that 15 days is outer limit (for DA to determine liability). The DAs shall 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 he can take benefit of reduced payment to settle the dispute," the IT department said.
The FAQ further said that where notice for initiation of prosecution has been issued with reference to tax arrears, the taxpayer has a choice to compound the offence and opt for Vivad se Vishwas. However, the scheme will not cover cases where prosecution has already been instituted and is pending in the court.
It has further clarified that declarant will be required to withdraw appeals over tax disputes at the time of payment of tax determined by the designated authority and not at the time of filing declaration under the scheme.
"Where assessee has made request for withdrawal and such request is under process, proof of request made shall be enclosed. Similarly, in case of arbitration, conciliation or mediation, proof of withdrawal of arbitration/ conciliation/mediation is to be enclosed along with intimation of payment to the DA," it said.
The scheme will not cover disputes pending before the Authority of Advance Ruling (AAR). However, if the AAR has determined the total income and the order has been challenged in High Court, it would come under the ambit of the scheme.
The FAQ further said the scheme would also cover tax deducted at source (TDS) and tax collection at source (TCS) disputes which are pending in appeal. "However, if there is no dispute related to TDS or TCS and there is delay in depositing such TDS/TCS, then the dispute pending in appeal related to interest levied due to such delay will be covered under Vivaad se Vishwas," it added.