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’.
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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There are some prominent exclusions:
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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The Vivad se Vishwas Scheme bill looks at two kinds of appeals.
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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