Tax disputes such as those involving Vodafone and Cairn can take advantage of ‘Vivad se Viswas,’ a tax dispute resolution scheme, said Pramod Chandra Mody, Chairman of the Central Board of Direct Taxes (CBDT). He also informed that individuals without business income can switch over to the new slab system based on their requirements. Excerpts:

There is confusion on the existing versus new income-tax slabs…

Individuals without any business income have the option of switching over to the new tax regime. However, those with business income cannot revert to the old scheme once they have opted for the new one as there are issues relating to depreciation, among others.

Will it be a logistic nightmare for the assessment officer because of the assessee switching over to the new system in one year and switching off the next year?

We do not perceive any problem. Technology will be helpful in a big way. One has to just tick at the time of filing returns as to whether he is opting for the new tax slab or continuing with the old.

Salaried persons are not very sure which one is more advantageous…

There is no change in the tax deducted at source rate. So, it would not make any difference. The individual has to just inform his employer whether he is going for the new scheme or not after factoring in the income-tax deductions or exemptions, which the taxpayer only knows best.

What happens under the Public Provident Fund kind of scheme, where the assessee sticks to the existing scheme for the first 10 years, and for the next five or even two years decides to switch to the new scheme? Will he be required to pay tax at the time of maturity?

If the scheme is in EEE (tax-exempt at the time of contribution, on accumulation and at the time of maturity), it will continue to remain in the same category. Suppose an individual, who was contributing ₹1 lakh and claiming deduction, continues to contribute the same amount without claiming any deduction, he will not have to pay tax at the time of maturity.

Who are all eligible under the ‘Vivad se Viswas’ scheme?

Individuals who have some sort of tax dispute pending as on January 31 are eligible to apply for this scheme; however, there are certain exceptions. In instances where there has been some action in the cases or prosecution has been launched, individuals cannot avail themselves of this scheme. By March 31, they must just pay the disputed amount and, in that case, the interest on penalty prosecution will be waived. If the dispute is only on interest and penalty and not on tax, the person can pay 25 per cent of that amount by March 31. In both the scenarios, if the taxpayer has not been able to avail himself of the scheme, a further window is open till June 30, but with a caveat that the payout amount would go up by 10 per cent. If the dispute is on penalty and interest, the individual will be taxed at 30 per cent instead of 25 per cent.

Q. What will happen to cases like Cairn and Vodafone? Can they take advantage of this scheme?

Whatsoever be the dispute, they can avail themselves of the scheme, if they wish to.

Under the proposed taxation scheme for non-resident Indians (NRIs), what is the definition of bona fide NRI?

Tax residency should not have been used for tax arbitrage or evading tax. That is the basic meaning of any bona fide NRI.

Canl you define some parameters, otherwise, it will be a subjective issue leading to litigations?

There is no need for that as of now as I don't see any confusion.

Is the taxpayer charter part of the Finance Bill or will it be notified separately?

It is part of the Finance Bill. The important distinction is that what was earlier available in an administrative framework, by way of a citizens charter, is now been given a statutory recognition. To that extent, we are empowering the taxpayers. It is basically trying to determine what are the deliverables the department is expected to give within what timeframe and with what benchmarks, and in case they do not meet those standards, what will be the further course of action. All these are under deliberation.

So, does this mean timing for refund payment will also be defined in the taxpayer charter?

That is possible. There will be all sorts of deliverables.

Tax collection target at over 12 per cent growth rate again seems to be ambitious…

These are very realistic estimates. As far as the current year is concerned, we are confident that we will achieve our targets. And so far as the next year goes, we should be equally confident because of revival in the economy, increased use of data analytics and tracking information which we have of high value transactions by the taxpayers. I'm going to say all that would come in handy to improve the compliance level.

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