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Why big taxpayers are giving tax amnesty scheme a miss

As many as 7,100 cases, accounting for Rs 1.7-lakh crore tax litigations, are yet to make up their mind on Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019; the deadline to avail the scheme is January 15

twitter-logoDipak Mondal | January 7, 2020 | Updated 09:20 IST
Why big taxpayers are giving tax amnesty scheme a miss
Officers say the deadline will not be extended

Big taxpayers have stayed away from the one-time indirect tax amnesty scheme -- Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. According to the finance ministry sources, a total of 1.61 lakh, or 87.5 per cent, of the eligible 1.84 lakh taxpayers availed its benefits. They declared tax dues of around Rs 80,000 crore. After availing its benefits, they would pay taxes of just over Rs 35,000 crore.

However, many taxpayers involved in as many as 7,100 cases, accounting for Rs 1.7-lakh crore tax litigations, are yet to make up their mind even as the deadline -- January 15, 2020 -- approaches.

The ministry sources say tax officers are pursuing such taxpayers to avail the scheme on time as the deadline will not be extended. Officers from the Indirect Tax Department are even explaining its benefits to such taxpayers.

The Sabka Vishwas Scheme gives a window to tax litigants to settle any pre-GST (Goods and Services Tax) indirect tax-related disputes. It covers disputes under central excise, service tax and specified cesses including education cess, Krishi Kalyan Cess and Swachh Bharat Cess, etc.

The scheme waives up to 70 per cent of the tax dues and 100 per cent of interest and penalty. If tax dues are up to Rs 50 lakh, the scheme offers to waive 70 per cent of the dues. If they are over Rs 50 lakh, the waiver will be 50 per cent. Besides, around 60 per cent dues, which are recoverable as arrears (matters have attained finality), will be waived if the tax involved is up to Rs 50 lakh and 40 per cent if the amount involved is more than Rs 50 lakh.

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Reasons for giving it a miss

As per sources, a number of taxpayers might be ill-advised by tax consultants and lawyers to not opt for the scheme as it would not be in their interest. CBIC (Central Board of Indirect Taxes and Customs) officials say even if a taxpayer gets advice on a case, and thinks its strong, economic prudence will justify it in availing the scheme.

A tax expert says the scheme is being used more often for cases where demand is less vis-a-vis the relative cost of litigation and interest, and also where an assessee believes the case is weak on merits.

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"Large taxpayers typically analyse pros and cons of litigation and then take a decision in case they are strong on merits. If they are, normally they will not opt for such amnesty scheme as they are pretty sure that they will indeed win the case," says Anita Rastogi, Partner, Indirect Tax, PwC India.

Some experts say in case of big taxpayers, the reason for litigation is not an evasion but interpretational. Hence, one-time amnesty does not resolve the issue.

Anandaday Misshra, Founder Advocate, AMLEGALS, explains: "In case of large taxpayers, most of the pending matters are of interpretation and significantly covered by settled ratios of a high court or the Supreme Court. They often have many repetitive demands as transactions are recurring in nature. This includes time-barred demands too. Hence, they have a different way of risk and liability assessment."

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