This scheme Vivad Se Vishwas Act, 2020 introduced by the Government of India to settle direct tax dispute in a swift and efficient way. The scheme was passed as part of the Union Budget 2020 and came into effect on March 17, 2020. The primary objective of the act is to reduce the litigation burden on the government and taxpayers by providing a mechanism to settle tax disputes that are pending at various levels (from the Commissioner of Income Tax Appeals to the Supreme Court).
Highlight of the Vivad Se Vishwas Act 2020:
- Scope: It covers disputes related to income tax, including cases pending in appeals, writs, Special Leave Petitions (SLPs), and arbitration.
- Settlement of Disputes:
- The taxpayer has to pay only the disputed tax amount without any interest or penalty if the payment is made by a specified date.
- If the payment is made after the specified date but before the final deadline, the taxpayer has to pay the disputed tax along with some interest or penalty.
- Disputes related to penalties and interest can be settled by paying a portion of the contested amount.
- Process:
- Taxpayers can declare their disputes under the scheme.
- After acceptance, the taxpayer needs to make the payment as per the provisions and submit proof of payment.
- Once the dispute is settled, it cannot be reopened in the future, ensuring finality.
- Exclusions: The scheme excludes certain categories of disputes, such as those involving tax evasion, undisclosed foreign income or assets, or cases under the Prevention of Money Laundering Act (PMLA).
- Benefits:
- It reduces the time, cost, and uncertainty associated with litigation.
- Provides relief to taxpayers from long-standing tax disputes.
- Helps the government collect revenues locked in litigation.
This scheme has been an essential step toward easing tax-related litigations in India and fostering a tax-friendly environment.