Vivad Se Vishwas scheme UPSC NOTES

The Vivad Se Vishwas scheme:

Vivad Se Vishwas scheme :The Union Cabinet has adopted an amendment to the ‘Direct Tax Vivad se Vishwas Bill, 2020’ to broaden its jurisdiction to include cases ongoing before various Debt Recovery Tribunals (DRTs).

Additionally, the modification applies to certain search and seizure instances involving a recovery of up to 5 crore.

  • Thus, in its current form, the Bill enables taxpayers to resolve disputes pending before the Commissioner (Appeals), Income Tax Appellate Tribunals (ITATs), Debt Recovery Tribunals (DRTs), High Courts, and Supreme Court.
  • The Direct Tax Vivad se Vishwas Bill, 2020 is comparable to the ‘Sabka Vishwas Scheme,’ which was implemented in 2019 to eliminate indirect tax litigation. It resulted in the resolution of more than 1,89,000 cases.
  • The government expects to raise approximately 39,500 crore under the Sabka Vishwas Scheme. However, once the amnesty window closed in January 2020, applications for tax relief totaling 90,000 crore were received. This demonstrates the scheme’s success.

Significant Points

  • The Bill establishes a simple and expeditious method for resolving unresolved tax disputes involving direct taxes (Income Tax and Corporate Tax).
  • Reduce Litigation: The Finance Ministry reports that 4.83 lakh direct tax cases worth Rs.9 lakh crore are currently waiting in the courts. The government intends to reclaim this money quickly and easily through this method.
  • Addressing the Government’s Income Shortage: The government is experiencing a significant revenue shortfall, particularly in the area of taxation, and thus raising revenues is one of the government’s objectives.
  • Direct tax receipts have fallen short of budget expectations due to the general economic slowdown and the September 2019 corporation tax rate drop.
  • In the event of tax payment, a taxpayer would be obliged to pay only the amount of contested taxes and would be completely exempt from interest, penalty, and prosecution if the payment is made by March 31, 2020.
  • However, if the tax arrears are only for disputed interest or penalty, 25% of the disputed penalty or interest must be paid.
  • Those who apply for this plan after March 31, 2020, will be required to pay an extra fee.
  • The scheme, however, will stay active until June 30, 2020.
  • Immunity of Appellant: Once a dispute has been settled, the designated authority is prohibited from levying interest or penalties in connection with the issue.
  • Additionally, no appellate forum can render a decision on the subject of the dispute once it has been resolved.
  • The scheme aims to resolve litigation and legacy disputes in the direct taxes category, as approximately 9.32 lakh crore in revenue is currently being held hostage by approximately 4.8 lakh appeals pending before various income tax appellate forums.
  • The entities that choose for the arrangement must pay the required tax, after which the tax agency will close all litigation against them and drop all criminal actions.

The Scheme’s Importance:

According to reports, the scheme has garnered an enormous response, with over Rs 97,000 crore in settlements as of February.

So far, the scheme has resolved over 1,25,144 of the 5,10,491 long-pending cases.

This represents 24.5 percent of the total number of such cases that were outstanding prior to the scheme’s implementation.

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