Clarification on Direct Tax Vivad se Vishwas Act, 2020

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Clarification on Direct Tax Vivad se Vishwas Act, 2020

The Central Board of Direct Taxation (CBDT) issued the Clarification on Direct Tax Vivad se Vishwas Act, 2020 vide a notification dated 28.10.2020.  During the Union Budget, 2020 the Vivad se Vishwas Act, 2020 was launched to provide for dispute resolution in respect of pending income tax litigation. With this notification, the CBDT has extended for the third time the deadline for making payment under the direct tax dispute settlement scheme ‘Vivad Se Vishwas’ by three months to March 31, 2021. Hence the taxpayer will not be required to pay the 10% additional disputed tax.

CBDT also notified that the declaration under the Vivad se Vishwas Scheme shall be required to be furnished latest by December 31st, 2020. In the present article, we are covering the Clarifications issued by the CBDT in respect of the Direct Tax Vivad se Vishwas Act, 2020.

Synopsis of Notification

The Synopsis of the notification pertaining to the Clarification on Direct Tax Vivad se Vishwas Act, 2020 is as follows:

  • With this notification, CBDT extends the payment date under the Vivad se Vishwas Act, 2020. The date for making payment without an additional amount under the Vivad se Vishwas Act from 31st December 2020 to 31st March 2021.
  • The CBDT also notified the last date for filing declaration under Vivad se Vishwas as 31st December 2020.

Direct Tax Vivad se Vishwas (DTVSV) Act

The Direct Tax Vivad se Vishwas (DTVSV) Act has been introduced to reduce pending income tax litigation, generate timely revenue for the Government of India. This act provides benefits to taxpayers by providing peace of mind, confidence, and savings on account of time and resources. The disputes covered under the Direct Tax vivad se Vishwas (DTVSV) Act is as follows:

  • Disputed tax
  • Disputed Fee
  • Disputed penalty
  • Disputed interest
  • Disputed Tax Deducted at Source (TDS) or tax collected at source (TCS)

Additional 10% of Disputed Tax

As per the previous rules, a taxpayer who needs to settle disputes under the DTVSV scheme will be allowed a complete waiver of interest and penalty if he/she pays the whole amount of tax in dispute by 31.03.2020. After March 31st,2020 an additional 10% of disputed tax need to be paid over and above the tax liability.

Filing of the Declaration under Vivad se Vishwas Act

As per the Vivad se Vishwas Act, the declarant is required to file a declaration before the designated authority (i.e. before an officer not below the rank of Commissioner of Income Tax Department).

On receipt of the declaration, the designated authority would determine the amount payable by the declaration. After determining the amount payable, the designated authority is required to grant a certificate to the declarant within 15 days from the date of receipt of the declaration, providing particulars of tax arrears and the amount payable On receipt of the certificate, the declarant is required to pay the amount determined within 15 days from the date of receipt of the certificate.

The declarant is required to intimate the details of payment to the designated authority.

On receiving the payment intimation, the designated authority shall pass an order. Such order shall be conclusive, and no matter covered by such order can be reopened in any other proceedings under the Income Tax Act or any other law.

Earlier Extension – COVID 19

The provisions of Vivad se Vishwas had been amended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 to provide certain relaxation because of the COVID-19 pandemic and also to empower the Central Government to notify certain dates.

Considering the COVID 19 Pandemic across the country, the Hon’ble Finance Minister, extended the Period of DTVSV Scheme for making payment without an additional amount till December 31st, 2020, from 31st March 2020. Hence the taxpayer will not be required to pay the 10% additional disputed tax.

The date for making payment and filing declaration under DTVSV

With this notification, CBDT extends the payment date under the Vivad se Vishwas Act, 2020 and also notified the last date for filing declaration under  DTVSV. The CBDT notification is summarised below:

Due date as per Furnishing declaration to opt for VSV Scheme Making payment without additional amount
Vivad se Vishwas Scheme 31st  March 2020 31st  March 2020
Ordinance 2020 30th June 2020 30th June 2020
The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 31st December 2020 31st December 2020
Circular No.18/2020, dated 28.10.2020 31st December 2020 31st  March 2021

Prescribed Date for Payment under Vivad se Vishwas

As mentioned above, according to the existing provisions of sub-section (2) of section 5 of the Vivad se Vishwas Act, the taxpayer needs to pay the amount within 15 days from the date of receipt of the certificate from the designated authority.

As per this notification, a declarant who files a declaration on or before 31.12.2020 can make a payment without an additional amount on or before 31.3.2021.

Clarifications on Payment under Vivad se Vishwas

The requiring payment by the declarant within 15 days from the date of receipt of a certificate from the designated authority may result in undue hardship for the declarant in whose case 15 days expires before 31.03.2021. To mitigate undue hardship and remove the difficulty, the Government notified the clarification as follows on payment of disputed tax is as follows:

As per the section 10 and11 of Vivad se Vishwas, it is hereby clarified that if a declarant files a declaration under Vivad se Vishwas on or before 31.12.2020, the designated authority, while issuing the certificate under sub-section (1) of section 5 of the Vivad se Vishwas Act, will allow declarant to make the payment without additional amount on or before 31.3.2020.

Procedure for Filing of the Declaration – e-Filing of DTVSV Form

The taxpayer needs to file five DTVSV Forms to avail of the direct tax dispute resolution under the Vivad se Vishwas Act, 2020. The Central Board of Direct Taxes has recently launched an online filing system for e-Filing of DTVSV Form. The taxpayers willing to avail of the direct tax dispute resolution need to file five online forms through the official website of the Income-tax department and the Designated Authority will issue the certificate and order electronically.

  • The declarant needs to file a declaration under the Vivad se Vishwas in Form-1 and relevant schedules.
  • The declarant also needs to file the undertaking in DTVSV Form-2 along with Form-1.
  • The Designated Authority will intimate the tax payable or refundable amount to the taxpayer in Form 3.
  • The declarant needs to intimate the details of payment in Form-4 along with proof of withdrawal of relevant appeal, writ, and arbitration for dispute resolution.
  • The Designated Authority will issue the order regarding the full and final settlement of the dispute in Form-5.

Click here to know more about the e-Filing of the DTVSV Forms

The circular pertaining to the Extention of Payment date under Vivad se Vishwas Act, 2020 is reproduced below for reference:

Circular_18_2020

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