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What is Vivad se Vishwas Scheme? Research Team | Posted On Friday, February 21,2020, 12:37 PM

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What is Vivad se Vishwas Scheme?



The Finance Minister Nirmala Sitharaman made an important announcement in the Union Budget 2020. A new scheme called Vivad se Vishwas scheme would be launched to resolve all pending tax disputes. This scheme looks to build on the success of the ‘Sabka Vishwas Scheme’.

What is Vivad se Vishwas Scheme?

The Vivad se Vishwas scheme is really simple to understand. It offers a complete waiver to taxpayers on both interest and penalty if they pay pending taxes by March 31st 2020. This helps people whose tax demands are locked in disputes in multiple forums.

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What is Vivad se Vishwas Scheme?

Salient features of Vivad se Vishwas Scheme:

  • This scheme settles pending direct tax-related disputes.
  • More than 4,83,000 direct tax-related disputes can easily be solved. They are currently pending in different appellate forums.
  • If you are not able to pay direct taxes by March 31st 2020, you have time till June 30th 2020. You would have to pay 10% more on the tax.
  • If it’s just the interest and penalty which is being disputed, you (taxpayer) will have to pay 25% of the disputed amount till March 31st 2020. It then goes up to 30%.

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Exclusions from Vivad se Vishwas Scheme:

There are some prominent exclusions:

  • Any case related to search or seizure.
  • Cases pending vis-a-vis undisclosed foreign income or assets.
  • Any cases where prosecution has been instituted on and before date of filing of declaration.
  • Also cases where CIT (Appeals) have issued a notice of enhancement.
  • Any cases where order of detention/prosecution has been instituted/conviction has been made under specified Acts.

What is Withdrawal and Waiver of Rights?

You would have to submit withdrawal proof of appeal/writ with intimation of payment. This is before the issuance of the final certificate or order for settling the dispute.

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Two Kinds of Appeals Under Vivad se Vishwas Scheme

The Vivad se Vishwas Scheme bill looks at two kinds of appeals.

  • Those filed by IT Department.
  • Those filed by Taxpayers.

If the taxpayer files an appeal; and if the payment is made by March 31st then you will have to pay the full amount of disputed tax. Its 125% of the disputed tax for cases related to search. There’s no interest or penalty. If the dispute is only related to penalty, interest or fee, then only 25% must be paid.

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Under the second category of appeal, the amount gets halved if payments are made by March 31st 2020. The declarants would have to pay 50% of the disputed tax. Its 62.5% in case of any searches. The penalty and interest gets waived. If the problem is only vis-a-vis fees, penalty or interest you will have to pay only 12.5% on this.

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