|vivad vs vishwas|
The Government has introduced The tax Vivad Se Vishwas Act, 2020 (‘VSV’) to supply for dispute resolution of pending tax litigation and timely collection of tax arrears.
The appellant shall be ready to settle the tax arrears on payment of 100% of disputed tax (125% in search cases), 25% of the disputed penalty/interest/fee upto 30th June, 2020.
Important aspects concerning eligibility, calculation of tax arrears, amount payable by the declarant under the VSV, immunity from other proceedings, etc. are covered during this Article. an equivalent are presented within the sort of FAQ’s as below:
*A. Who are eligible to choose VSV?
1. Where an appeal/writ petition/special leave petition is pending before any appellate forum [SC/HC/ITAT/CIT(A)] as on 3 1.01.2020 or the deadline for filing an equivalent has not expired as on 3 1.01.2020.
2. Where an individual has filed his objections before Dispute Resolution Panel (‘DRP’) against the draft assessment order and are pending as on 3 1.01.2020 or the DRP has issued the directions to the AO but the ultimate assessment order isn't passed as on 3 1.01.2020.
3. Where an application for revision u/s. 264 of the tax Act, 1961 (‘the IT Act’) is pending as on 3 1.01.2020.
4. Cases where Miscellaneous Application is pending before ITAT, or application u/s. 154 is pending before CIT(A) aren't eligible under
5. Search cases where disputed tax exceeds Rs. 5 crores in an assessment year shall not be eligible for that assessment year.
6. Cases where prosecution has been instituted within the Court on or before the date of filing of declaration under VSV aren't eligible.
7. Cases concerning undisclosed income/asset located outside India aren't eligible.
8. Cases concerning information received from Foreign Countries under DTAA aren't eligible.
9. Cases where detention order has been passed or prosecution has been instituted under the circumstances specified under VSV Act aren't
*B. If any order of appeal has been passed after 31.01.2020 by any appellate forum dismissing the appeal or partly allowed, whether the assessee are going to be eligible under VSV?
Yes, in cases where the appeal is dismissed after 31.01.2020, the appellant can prefer to avail the advantage of VSV, since the appeal is pending before the appellate forum as on 3 1.01.2020 . Further, if the appeal is partly allowed after 31.01.2020, the appellant would need to file the declaration of the entire amount of tax arrear outstanding as on 3 1.01.2020 i.e. will need to ignore the part relief. Further, albeit any appeal is dismissed as unadmitted after 3 1.01.2020 on any ground like lack of jurisdiction, procedural fault, any defects, irregularity or incompleteness, delay in filing of appeal, etc., the appellant would still be eligible to opt under VSV because the appeal is pending as on 3 1.01.2020.
*C. what's the quantity payable under VSV?
|Nature of tax arrear||Amount payable on before 30or June, 2020||Amount payable after|
30 June, 2020 till the
last date (to be notified)
|Disputed Tax, interest and|
penalty on such disputed tax
|100% of disputed tax (125% in search cases)||110% of disputed tax|
(135% in search cases)
|Disputed interest or disputed penalty or disputed fee||25%||30%|
|Disputed Tax, interest and penalty on such disputed tax in Covered matters* or where appeal is filed by Revenue||50% of disputed tax|
(62.5% in search
|55% of disputed tax|
(6 7.5% in search cases)
|Disputed interest or disputed penalty or disputed fee in Covered matters* or where appeal is filed by Revenue||12.5%|
(one-half of 25%)
(one-half of 30%)
*D. the way to calculate disputed tax in cases where dispute relates to reduction of business loss or unabsorbed depreciation?
In such cases, the appellant shall have the subsequent two options:
1. The tax payable on such reduction of losses for that assessment year shall be considered as disputed tax, which the appellant shall be required to pay (i.e. the appellant would only need to pay the quantity of disputed tax. Interest are going to be waived). In such circumstances, the appellant shall be ready to carry over the losses to subsequent years as per his return of income; OR
2. Accept the reduction in losses in assessment year under dispute and carry over the reduced amount of loss or unabsorbed depreciation, without paying any tax within the year under dispute. As a result, the appellant shall be ready to carry over only the reduced amount of losses. Consequently, the appellant will have reduced amount of losses to be set-off against income of the next years. this might end in additional liabilities within the subsequent years which he shall be susceptible to pay,
E.g. ABC Ltd. – In A.Y. 20 15-16, Losses c/f. as per return of income – Rs. 90 Crores. Addition made within the said assessment – Rs. 30 Crores. So, reduced loss c/f. – Rs. 60 Crores (90-30). For the A.Y. 20 16-17 – Assume net income of Rs. 75 Crores.
If the assessee choses option (i) above, disputed tax of Rs. 9 Crores (30% of 30 Crores) is required to be paid alongwith surcharge and cess for the AY 20 15-16 without payment of any interest and there'll be no impact on the liabilities of any subsequent year and in AY 20 16-17, he are going to be allowed to set-off b/f. loss of Rs. 90 Crores with none reduction.
If the assessee choses option (ii) above, then there'll be no liabilities within the AY 20 15-16. But, the assessee will need to carry over reduced loss of Rs. 60 Crores only. Earlier, within the original return of income for AY 20 16-17, the appellant would have adjusted the b/f. loss of Rs. 90 Crores. However, as a results of choosing Option (ii), it'll be allowed to set-off reduced b/f. loss of Rs. 60 Crores only. Thus, now the corporate will need to pay tax of Rs. 4.5 Crores [being 30% of (NP of 75 Crores – reduced b/f. loss of Rs.60 Crores)] alongwith surcharge, cess and Interest for the AY 2016-17 upto payment of tax (i.e. till date).
*E. what's the procedure to be followed under VSV?
All the forms under the VSV need to be furnished electronically on www.incometaxindiaefiling.gov.in à Login a get Vivad se Vishwas Tab in ‘Prepare and Submit Online’ mode. For TDS/TCS matters, declaration under VSV has got to be filed through TAN Login on the e-filing portal.
The entire procedure under the VSV is as under:
a. Filing of Declaration in Form-1 and Form-2 :-
File declaration in Form-1 alongwith an undertaking in Form-2 waiving other rights in reference to tax arrears. Both the forms are being submitted together on the e-filing portal. The forms need to be verified under DSC, if the return of income is required to be filed under DSC, in other cases, the declaration has got to be verified through EVC.
b. Certificate from Designated Authority in Form-3 :-
Within 15 days from the date of receipt of declaration, the designated authority (an officer not below the rank of Commissioner) shall issue a CERTIFICATE in Form-3 electronically, determining the quantity payable by the declarant as full and final settlement of the tax arrears.
c. Payment of Taxes and withdrawal of pending appeals, etc. :-
The declarant shall pay the quantity determined in Form-3 within 15 days of receipt of Certificate in Form-3. However, if the declarant fails to pay an equivalent , the declaration shall be presumed never to possess been made. Further, the declarant has got to withdraw the appeal, etc. pending before any appellate forum, that the declaration under VSV has been filed.
d. Intimation of Payment of Taxes in Form-4 :-
The declarant has got to intimate the small print of tax paid alongwith proof of withdrawal of appeals, etc. in ‘Form-4 – Intimation of Payment u/s. 5(2) of the
VSV Act’. The declarant shall file a letter before the appellate forum indicating that he has opted to settle the dispute concerning tax arrears under the VSV. Copy of acknowledgment of such letter would be treated as Proof of withdrawal of appeal/writ petition/special leave petition, etc. an equivalent has got to uploaded online on the e-filing portal while filing Form-4.
e. Order for full and final settlement of tax arrears in Form-5 :-
Upon receipt of Form -4 from the declarant, the designated authority shall pass an Order in ‘Form-5 – Order for full and final settlement u/s. 5(2) r.w.s 6 of the VSV Act’ certifying the following:
i. The declarant has paid the quantity payable under the VSV Act.
ii. Immunity has been granted from prosecution/penalty in respect of the settled tax arrears.
iii. Declaration under the VSV Act shall not amount to conceding the tax position by the declarant.
*f. What all immunities are going to be granted to the declarant?
Once the matter has been settled under VSV, immunity shall be granted from initiation of proceedings in respect of offence and imposition of penalty. Further, as per Sec. 5(3) of the VSV Act, regardless of which are settled under VSV, shall be reopened under the Income-tax Act or the other law for the nonce effective . However, it's going to be noted that the other issues which aren't covered under the appeal or settled under VSV could also be reopened.
About 4,83,000 cases are pending before various appellate forums. so as to scale back litigation and timely collection of revenue, VSV is useful to both, the assessee also because the revenue. Even after the CBDT Clarification vide Circular No. 7/2020, tons of issues are yet to be addressed like whether MA pending before ITAT might be included, whether Form-3 Certificate are often rectified by the designated authority, cases where appeals of dead person couldn't be filed, etc.
In past, schemes like tax Dispute Resolution Scheme, 2016 and Kar Vivad Samadhan Scheme, 1998 were introduced to supply for settlement of tax disputes. This Scheme has taken care of shortcomings of these earlier schemes and is relatively wider in scope. This Scheme may be a good opportunity for appellants to settle their disputes to avoid the uncertainty of outcome of pending litigation.