In a bid to resolve nearly 5 lakh pending income tax cases, with demand of more than Rs 9 lakh crore, Lok Sabha on Wednesday passed 'Vivad Se Vishwas’ Bill. This scheme offers a one-time settlement option to taxpayers to resolve disputes.
This Bill also includes the amendments that were cleared by the Union Cabinet on February 12 i.e. including the cases which are stuck in debt recovery tribunals (DRTs) and the cases which are under certain seizures where recoveries are up to Rs 5 crore.
Hitesh Gajaria, partner and co-head of tax at KPMG India, said that 'Vivad Se Vishwas' scheme is far more favorable than the scheme earlier.
“The government has heard the representations that all of us had made.
"These were taken up at the highest level. I think the scheme is far more attractive than it was when in early February when the first bill was tabled.”
“I have no doubt in my mind that taxpayers are today giving a very serious look at all these changes and assessing their positions. I am sure that a lot of taxpayers will take advantage of this enhanced and more simplified and I would say even cheaper scheme especially if you have one tax case,” he added.
Dinesh Kanabar, CEO of Dhruva Advisors, said that the key change was the provision of paying half the amount if case was under litigation.
“The key change which the government made from the earlier Bill was the provision of paying only half the amount if the tax office was at loss and was in litigation and that was a very important point because what people came back to say is if we have one in appeal and we still don’t want to litigate, then you can't ask us to pay 100 percent. So, a very welcome change.”
However, Kanabar added: “A not-so-welcome provision was one suggestion which has not been incorporated where the bill requires that you have to settle the entire dispute and not part of it."
"In most large corporates, the items in appeal are 10-30 and even more and you might not want to settle all of it because items in appeal you believe you have a good case. What is now provided is you have to settle all of it.”