Another Vivad se Vishwas and Sabka vishwas Scheme soon; Govt likely reveal in Upcoming Budget

Another Vivad se Vishwas and Sabka vishwas Scheme soon; Govt likely reveal in Upcoming Budget In what might be a win-win situation for both the industry and the government, North Block is currently considering the possibility of introducing yet another set of one-time tax dispute resolution schemes to cut down on litigation and release funds.

One Scheme for both direct and indirect tax disputes

A scheme like this is being considered by the revenue department, according to sources, for both direct and indirect tax disputes. If approved, the schemes could be included in the budget announcement.

Success of Sabka Vishwas and Vivad se Vishwas

The concept is based on the past success of dispute resolution programmes that were previously announced in prior budgets. For instance, in 2019 the Sabka Vishwas Legacy Dispute Resolution Scheme (SVLDRS) was introduced, and it generated about Rs 38000 crore in revenue. Similarly, noting the success of SVLDRS, for direct taxes, Vivad se Vishwas Scheme was announced in 2020 and the revenue collected under this scheme was around Rs 54000 crores. According to sources, the government's intention is to lessen the burden of litigation for both business and the government, even though the revenue department is still working out the details and nothing is final as of yet regarding when the scheme will be announced and how it will look. The proposal under consideration at the Central Board of Direct Taxes—the board in charge of direct tax policy and administration—is "providing an opportunity for taxpayers to self-declare for settling disputes based on existing tax demand," according to sources. Other parameters that could be included in the scheme include the "expansion of disputes covered under Section 270AA, which will also allow cases involving appeals pending before CIT(A) and other higher appellate fora," according to sources. Section 270AA was enacted to provide immunity from penalty when an assessee accepted the assessment order by paying the tax and interest amount and did not file an appeal against it. Apart from this, "Assessee or the taxpayer could be given an option to withdraw the appeal before CIT(A) and other fora if they pay full tax and interest upto the date of assessment together with fixed penalty depending upon the stage of appeal. For example, if a matter is pending before CIT(A), a fixed penalty of, say, 10% of the tax in dispute may be imposed. And for ITAT matters, 20% may be required," sources said. "In all such cases where taxpayers pay the penalty and taxes with interest into the date of assessment, the revenue appeals and other proceedings should be withdrawn," sources added. The Central Board of Indirect Taxes and Customs (CBIC), the board responsible for overseeing the administration and policy of indirect taxes, is reportedly considering "the scheme for disputes related to Customs classification, disagreement over valuation, and issues regarding the applicability of exemption notifications, among other things." The programme will also give taxpayers a chance to self-report any shortfalls or failures to pay their dues to the Customs Service, and in such cases, there may be a complete immunity from interest and penalty. If this plan were to be implemented, sources said that, once again, "the quantum of waiver of tax due, interest and penalty to depend on the stage of litigation." The case for the government looking into giving importers and exporters a chance to settle disputes and offload the burden associated with any likely future liabilities is very clear, according to sources. The burden of litigation and the money spent on these disputes, say experts, will be lifted if the schemes are made public. This will benefit both the industry and the government. According to the government, there were 33,653 customs duty cases pending in various courts as of January 1, 2022, costing a total of about Rs 38,293.32 crore. It will now be interesting to see when and what the government announces regarding resolving disputes.