Economy

Vivad se Viswas scheme: IT dept scraps 15-day condition for payment of tax

Our Bureau New Delhi | Updated on October 28, 2020 Published on October 28, 2020

The Centre hopes the new scheme will bring down the number of pending cases and result in a portion of the locked revenue being realised

The Income Tax Department has done away with the 15-day condition for payment of tax due after getting the certificate under ‘Vivad se Viswas’ scheme.

“It is hereby clarified that where a declarant files a declaration under Vivad se Vishwas on or before December 31, 2020, the designated authority, while issuing the certificate under sub-section (I) of Section 5 of the Vivad se Vishwas, shall allow declarant to make payment without additional amount on or before March 31, 2021,” the I-T Department said in a circular on Wednesday.

Dispute resolution

As announced in the Budget this fiscal, the scheme aims to provide a mechanism for the resolution of pending Income Tax disputes. As on November 30, 2019, there were about 4.83 lakh appeals pending at various levels involving tax arrears to the tune of about ₹9.32 lakh crore. The Centre hopes the new scheme will bring down the number of pending cases and result in a portion of the locked revenue being realised.

On Tuesday, the I-T Department extended the date of making payment without additional amount under the scheme by three months to March 31, 2021. Last date to file a declaration has been notified as December 31, 2020 as per a notification issued dated October 27.

According to the Department, tax under the existing provisions of sub-section (2) of Section 5 of the Direct tax Vivad se Vishwas Act, the declarant is required to pay the amount within a period of 15 days from the date of receipt of certificate from the authority. However, as per the aforesaid notification, a declarant who files declaration on or before December 31, 2020 can make payment without additional amount on or before March 31, 2021.

Hence, “requiring payment by the declarant within a period of 15 days from the date of receipt of certificate from the designated authority may result into undue hardship for the declarant in whose case the period of 15 days expires before March 31, 2021,” said the Department, while relaxing the norm under the system.

Sandeep Jhunjhunwala, Partner at Nangia Andersen LLP, said that clarifying its position in the recent notification, the Centre has elucidated that those taxpayers can make the payment without additional amount up to March 31, 2021 irrespective of when the certificate is issued to such taxpayer by the designated authority. Erstwhile, the Revenue Authorities could be seen as very keen on collection as the Vivad se Vishwas Scheme (with amendments) required the taxpayer to make the payment within 15 days of receipt of certificate from the designated authority failing which there would be an additional outflow for the taxpayer.”

‘Short-term breather’

He added, “Recognising the undue hardship caused to the taxpayers, this clarification comes out as a shot-term breather for taxpayers with liquidity crunch in economy suffering the after-effects of the lockdown on account of the pandemic.

“Now, these taxpayers will not be penalised for delay in payment after the receipt of certificate but on or before March 31, 2021 as the condition for payment within 15 days of receipt of such certificate seems to have lost its significance. Also, as the payment interval after filing the declaration is extended for 3 months, there might be a possibility of additional taxpayers willing to filing the declaration by the coming due date, December 31, 2020,” he said.

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Published on October 28, 2020
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