Lok Sabha passes Direct Tax Vivaad Se Vishwas Bill

The Lok Sabha passed the Direct Tax Vivad Se Vishwas Scheme Bill on Wednesday, opening doors for taxpayers to end pending disputes by paying the tax amount, with interest and penalties waived off, till March 31.

The bill was passed amid din without any discussion as the opposition continued its protest over the Delhi violence.

Finance minister Nirmala Sitharaman had introduced the bill on February 5 and moved significant amendments on March 2 to the scheme to make it more attractive to taxpayers, where in only half of the disputed amount will have to be paid in cases where the income-tax department has filed an appeal or has lost a case.


The scheme is aimed at releasing about Rs 9.32 lakh crore stuck in 483,000 cases across various fora including at the Commissioner (Appeals), Income Tax Appellate Tribunal (ITAT), high courts, Supreme Court and debt recovery tribunals, besides reducing needless litigation and associated expenses.

Taxpayers willing to settle disputes will be allowed a complete waiver of interest and penalty if they pay the entire amount of tax in dispute by March 31 this year, and by paying 10% more if they opt to pay by June 30. Further, where arrears relate to disputed interest or penalty only, then 25% of the amount is to be paid by March end, and 30% between April and June-end. The scheme will remain open till June 30.

In cases where the income tax department has filed an appeal or where it has lost a case, only 50% of the disputed amount will have to be paid, while the amount will rise to 62.5% in search cases, but penalty and interest will be waived. In case the amount of penalty, interest or fee is the matter of dispute, then only 12.5% of that amount will have to be paid till March 31. Post this date, 55% of the full disputed tax amount, and 12.5% more in case of search cases, will be paid.

Where penalty, interest or fee has been disputed, 15% will have to be paid to settle the issue. The scheme also covers appeals in search and seizure operations where the recovery is up to Rs 5 crore in any given financial year.

The government will also grant immunity from institution of any proceeding for prosecution for any offence under the I-T Act in respect of matters covered in the declaration that the taxpayer will give at the time of settling the ongoing dispute through the scheme. The taxpayer will also get immunity from imposition of penalty and levy of interest.

However, the filing of declaration will not set any precedence, and neither can both parties claim that settlement of the proceedings amounts to conceding of tax position in any other proceeding.

Further, taxpayers can get refunds if the amount in the settlement scheme comes to less than that already paid before availing the scheme.

Tax experts said the revised terms will make the scheme far more attractive, aligning well with the government’s recent tax proposals to reduce corporate tax rates and eliminate dividend distribution tax.

“The revised terms reflect a serious and determined initiative by the government to reduce the tax litigation build-up,” said Gokul Chaudhri, partner at Deloitte India.