The Direct Tax Vivad se Vishwas Act, 2020 (hereinafter referred to as ‘VsV’) is a Direct Tax Dispute Settlement Scheme which has received the assent of the Honourable President of India on March 17, 2020. Recently a similar scheme was introduced to settle the pending disputes under the Indirect Taxes, post successful results of which, the subject scheme has been launched for settling the disputed cases in the Direct Tax regime. The main objectives of the scheme are-
COVERAGE The assessees having the following category of disputes shall be eligible to opt for the scheme-
? Disputed tax (including interest or penalty on such disputed tax) in relation to an assessment or reassessment order; and ? Disputed interest, disputed penalty or disputed fees where there is no disputed tax.
Note ? Disputed tax can also include the tax determined on default in respect of tax deducted at source (TDS) or tax collected at source (TCS). ? Disputed tax shall include tax on enhancement notice. EXCLUSIONS
CALCULATION OF AMOUNT PAYABLE
|Nature of Tax Arrear
|Amount Payable under VsV on or before
|Amount Payable under VsV on or after
|Disputed Tax, Interest Charged / Chargeable and Penalty Levied / Leviable thereon.
|100% of amount of Disputed Tax (No interest and no penalty).
|Lowest of- ? 110% of amount of Disputed Tax OR ? 100% Disputed Tax along with interest and penalty thereon.
|Disputed Tax, Interest or Penalty assessed on the basis of Search U/s 132 or 132A of Income Tax Act
|Lowest of- ? 125% of amount of Disputed Tax OR ? 100% Disputed Tax along with interest charged / chargeable and penalty levied / leviable thereon.
|Lowest of- ? 135% of amount of Disputed Tax OR ? 100% Disputed Tax along with interest charged / chargeable and penalty levied / leviable thereon.
|Disputed Interest, penalty or fee but does not include Disputed Tax.
|25% of the Disputed Interest, penalty or fee.
|30% of the Disputed Interest, penalty or fee.
COURSE OF ACTION Eligible assessees while deciding to opt for VsV scheme shall consider points such as the cost involved in litigation vs the tax disputed, probability of a favourable outcome otherwise, availability of instant funds to pay the liability as the same will have to be paid within 30 days from the date of opting the scheme. However once the assessee is ready to exercise the option, the following course of action shall have to be adopted-
As a special measure the timeline to opt for VsV scheme without incurring any 10% additional tax or interest and penalty has been extended to 30 June 2020. The government notified the forms on 18 March 2020 and therefore this is the appropriate time to file these applications. We, at ASC, shall be pleased to assist the assessees interested to opt for the scheme and can also assist in evaluating whether the scheme shall be useful or otherwise.
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