As expected, Finance Minister Nirmala Sitharaman announced an amnesty scheme for direct taxes to help lessen the number of pending tax litigations. Resolving the tax disputes in the country, the proposed 'Vivad se Vishwas' direct tax amnesty scheme would help the government get a much-needed revenue boost.
"Under the proposed 'Vivad Se Vishwas' scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided he pays by March31, 2020. Those who avail this scheme after March 31, 2020 will have to pay some additional amount. The scheme will remain open till June 30, 2020," the Finance Minister said in her Budget speech on Saturday.
FM Sitharaman told the Parliament that 4.83 lakh direct tax cases are currently pending in various appellate forums. Data furnished in the Budget document show that Rs 9.41 lakh crore is stuck in these pending tax litigations.
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Even in the past, the government has been trying to reduce the backlog of pending tax disputes by increasing monetary limits on the tax department filing appeals before Income Tax Appellate Tribunals and courts. This resulted in reduction of tax demands involved in appeals from Rs 6.38 lakh crore in March 2018 to Rs 5.71 lakh crore in March 2019.
However, the 'Vivad Se Vishwas' amnesty scheme is expected to reduce the number of pending cases sharply. Around Rs 5 lakh crore is stuck due to direct tax litigation alone at income tax tribunals, high court and Supreme Court as on March 2017. At the commissioners (appeal) level, disputes involving Rs 6 lakh crore were pending as on 31 March 2019.
This initiative is in line with a similar amnesty scheme for indirect tax floated in the last Budget. The Sabka Vishwas Scheme launched last year for resolution of indirect tax disputes fetched the government over Rs 35,000 crore after it resolved 1.61 lakh cases involving over Rs 80,000 crore tax dues.
The scheme waived 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.