{"id":56266,"date":"2020-02-29T19:00:00","date_gmt":"2020-02-29T13:30:00","guid":{"rendered":"https:\/\/blogadmin.forumias.com\/?p=56266"},"modified":"2020-02-29T17:13:16","modified_gmt":"2020-02-29T11:43:16","slug":"7-pm-vivad-se-vishwas-may-help-clear-the-backlog-of-pending-tax-cases-29th-february-2020","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/7-pm-vivad-se-vishwas-may-help-clear-the-backlog-of-pending-tax-cases-29th-february-2020\/","title":{"rendered":"7 PM | Vivad Se Vishwas may help clear the backlog of pending tax cases| 29th February 2020"},"content":{"rendered":"\n<p><strong>Context:\n<\/strong>Vivad\nse vishwas Scheme.<\/p>\n\n\n\n<p><strong>More\nin news:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The\nDirect Tax Vivad se Vishwas Bill, 2020 was introduced in Lok Sabha by the\nMinister of Finance, Ms. Nirmala Sitharaman, on February 5, 2020.&nbsp;<\/li><\/ul>\n\n\n\n<p><strong>Vivad\nSe Vishwas Scheme:&nbsp;The&nbsp;Direct Tax Vivad Se Vishwas Bill, 2020:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>In\nessence, the Bill is aimed at resolving direct tax related disputes in a speedy\nmanner.&nbsp;It aims to settle pending cases on direct taxes involving Rs 9.32\nlakh crore.<\/li><li>The\nVivad se Vishwas Scheme is to do for direct tax related disputes exactly what\nSabka Vishwas did for indirect tax related disputes. In the last budget, Sabka\nVishwas Scheme was brought in to reduce litigation in indirect taxes. It\nresulted in settling over 1,89,000 cases.<\/li><li>The\namnesty scheme, at present, covers disputes pending at the level\nof&nbsp;commissioner (appeals), Income Tax Appellate Tribunals (ITAT), high\ncourts, the Supreme Court and those in international arbitration.<\/li><li>It\noffers&nbsp;a&nbsp;complete waiver on interest and penalty&nbsp;to the\ntaxpayers who pay their pending taxes by March 31.<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"284\" height=\"211\" src=\"https:\/\/i0.wp.com\/blogadmin.forumias.com\/wp-content\/uploads\/2020\/02\/indirect-tax.png?resize=284%2C211&#038;ssl=1\" alt=\"\" class=\"wp-image-56267\"\/><\/figure>\n\n\n\n<p><strong>Salient\nFeatures:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The Scheme has two main components:<ul><li><strong>Dispute resolution:<\/strong> Reducing tax litigations pending at various forums.<\/li><li><strong>Amnesty Component:<\/strong> taxpayers given the opportunity to pay the disputed tax and be free from any other consequence under the law.<\/li><li><strong>Amount Payable For Resolution:<\/strong><\/li><\/ul><\/li><\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"\"><tbody><tr><td>\n <strong>Disputes\n relating to<\/strong>\n <\/td><td>\n <strong>Payable\n before March 31, 2020<\/strong>\n <\/td><td>\n <strong>Additional\n amount payable after March 31, 2020<\/strong>\n <\/td><\/tr><tr><td>\n <strong>Payment\n of tax<\/strong>\n <\/td><td>\n Amount of\n disputed tax (any interest or penalty associated with such tax will be\n waived)\n <\/td><td>\n 10% of the amount of disputed tax, orInterest and penalty relating to that\n tax, whichever is lower\n \n <\/td><\/tr><tr><td>\n <strong>Payment\n of fee, interest or penalty<\/strong>\n <\/td><td>\n 25% of the\n amount under such dispute\n <\/td><td>\n Another 5% of\n the amount under such dispute\n <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Disputes not covered: <\/strong>\u00a0The proposed mechanism will not cover certain disputes. \u00a0These include disputes: <ul><li>where prosecution has been initiated before the declaration is filed, <\/li><li>which involve persons who have been convicted or are being prosecuted for offences under certain laws (such as the Indian Penal Code), or for enforcement of civil liabilities, and <\/li><li>involving undisclosed foreign income or assets\u00a0<\/li><\/ul><\/li><li><strong>Withdrawal and waiver of rights: <\/strong>The taxpayer would be required to submit the proof of withdrawal of appeal\/writ with the intimation of payment, i.e., before the issuance of the final certificate\/order for settling the dispute.\u00a0 Further, no recourse shall be available to the taxpayer against the final order.<\/li><li><strong>Beneficiary: <\/strong>A taxpayer can avail the benefit under the scheme in respect of Income-tax appeals pending before the appellate forum as on 31-01-2020. These appeals could be filed either by the taxpayer or by the Income-tax authority.<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"738\" height=\"414\" src=\"https:\/\/i0.wp.com\/blogadmin.forumias.com\/wp-content\/uploads\/2020\/02\/tax-tally.png?resize=738%2C414&#038;ssl=1\" alt=\"\" class=\"wp-image-56269\"\/><\/figure>\n\n\n\n<p><strong>What\nwas the response to the Sabka Vishwas scheme?<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>At last\ncount, the government expected to have raised Rs 39,500 crore from the Sabka\nVishwas scheme, which was only about indirect tax disputes.<\/li><li>The\namnesty window for Sabka Vishwas closed on January 15 and close to 1.90 lakh\ncrore applications, in relation to taxes worth Rs 90,000 crore was received.<\/li><li>One of\nthe standout successes of this scheme was Mondelez India Foods Pvt Ltd (which\nwas earlier known as Cadbury India) settled one of its most controversial tax\ndisputes.<\/li><li>The\nfirm was accused of evading taxes to the tune of Rs 580 crore (excluding taxes\nand penalties). In the end, Mondelez paid Rs 439 crore on January 20 under the\namnesty scheme.<\/li><\/ul>\n\n\n\n<p><strong>Challenges\nto India\u2019s tax collection:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>High Rate and Low Yield of Direct Taxes: <\/strong>In India, the rate of direct tax is very high but the contribution to the total tax rev\u00adenue is very low. This is because high tax rates encouraged tax evasion and avoidance on a large scale.\u00a0<\/li><li><strong>Low Contribution of Income Tax:<\/strong> Al\u00adthough the rate of income tax is the highest in India, the contribution from such is very low. Tax evasion seems to be the primary reason. Another reason is the high exemption limit in a country where per capita income is very low. In India, the exemption limit has been raised from time to time, but the levels of national and per capita incomes have failed to increase proportionately.<\/li><li><strong>Double Taxation of Dividends:<\/strong><ul><li>Due to double taxation of dividend, the rate of domestic saving and capital formation has failed to increase appreciably. Companies pay corpora\u00adtion and other taxes (such as excess profit tax or surtax) to the Government. A portion of net profit after tax is usually distributed among sharehold\u00aders in the form of dividend. A portion of such dividend income is again taxed away in the form of personal income tax.<\/li><li>Consequently, those who pay tax on dividend income cannot save much and companies find it increasingly difficult to raise financial resources on a large scale. It is often al\u00adleged that one of the cause of industrial stagna\u00adtion in India has been the high rate of taxation and slow growth of corporate capital.<\/li><\/ul><\/li><li><strong>Absence of Agricultural Income Tax: <\/strong>An\u00adother feature of India\u2019s tax system is that there is no tax on agricultural income. Agriculture is the dominant sector of the Indian economy. The con\u00adtribution of agriculture and related activities to India\u2019s GDP was 29.3% in 1999-00. Planned in\u00advestment on agriculture has also increased over the years. But agriculture has failed to make any contribution to the introduction of the Govern\u00adment\u2019s tax revenue.<\/li><li><strong>Importance of Indirect Taxes: <\/strong>In India, importance of indirect taxes has increased over the years which imply that the importance of di\u00adrect taxes has diminished. In absolute terms the contribution of direct taxes has increased but the percentage contribution of such taxes in total tax revenue has declined<\/li><li><strong>Progressive Taxes on Income: <\/strong>The Gov\u00adernment has made the system of direct tax progres\u00adsive and progressiveness is considered desirable in the interest of equity and for reducing the dis\u00adparities in the distribution of income and wealth. But progressive taxes encouraged tax evasion and avoidance and have failed to reduce inequalities of income and wealth.<\/li><li><strong>Widening the Indirect of Tax Net: <\/strong>Over the years, the indirect tax net has been spread wide. Almost all the commodities that we buy bear high indirect taxes as sales tax, excise duty, customs duty, octroi, cess and so on. At present, Central Government revenue from two main taxes, viz., union excise duties and customs accounts for about 80% of the total revenue.<\/li><\/ul>\n\n\n\n<p><strong>Tax-To-GDP\nRatio:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The\ntax-to-GDP ratio is a ratio of a nation&#8217;s tax revenue relative to its gross\ndomestic product (GDP), or the market value of goods and services a country\nproduces.&nbsp;It is a representation of the size of the government&#8217;s tax\nrevenue expressed as a percentage of the GDP. Higher the tax to GDP ratio the\nbetter financial position the country will be in. The ratio represents that the\ngovernment is able to finance its expenditure. A higher tax to GDP ratio means that\nthe government is able to cast its fiscal net wide. It reduces a government&#8217;s\ndependence on borrowings.<\/li><li><strong>&nbsp;Importance of tax to GDP ratio:<\/strong> A\nhigher tax to GDP ratio means that an economy&#8217;s tax buoyancy is strong as the\nshare of tax revenue rises in sync with the rise in the country&#8217;s GDP. India,\ndespite seeing higher growth rates, has struggled to widen the tax base. Lower\ntax-to-GDP ratio constrains the government to spend on infrastructure and puts\npressure on the government to meet its fiscal deficit targets.<br>\n<br>\n<\/li><\/ul>\n\n\n\n<p><strong>Way\nForward:<\/strong><\/p>\n\n\n\n<p>The introduction\nof the scheme is a welcome move and is expected to reduce tax litigation. The\nGovernment is also required to give assurance to the taxpayer that the\nacceptance of any addition under the scheme will not be used as a tool to\npunish the taxpayer in other proceedings. The Government should have considered\nextending the first payment window from March 31, as taxpayers require\nsufficient time to review the pros and cons of the Scheme, their eligibility,\nand then take the necessary steps for withdrawing appeals and making payments.<\/p>\n\n\n\n<p><strong>Conclusion:<\/strong><\/p>\n\n\n\n<p>\u2018Vivad se Vishwas\u2019 will undisputedly benefit the interest of taxpayers looking for an expeditious and rapid settlement of their tax claims raised by the department. A negotiated settlement, between the taxpayer and the CBDT is a sensible way to resolve disputes without moving to court. It is an advantageous scheme for both the taxpayer and the revenue department. <\/p>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindubusinessline.com\/opinion\/editorial\/vivad-se-vishwas-may-help-clear-the-backlog-of-pending-tax-cases\/article30905483.ece\">https:\/\/www.thehindubusinessline.com\/opinion\/editorial\/vivad-se-vishwas-may-help-clear-the-backlog-of-pending-tax-cases\/article30905483.ece<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Context: Vivad se vishwas Scheme. More in news: The Direct Tax Vivad se Vishwas Bill, 2020 was introduced in Lok Sabha by the Minister of Finance, Ms. Nirmala Sitharaman, on February 5, 2020.&nbsp; Vivad Se Vishwas Scheme:&nbsp;The&nbsp;Direct Tax Vivad Se Vishwas Bill, 2020: In essence, the Bill is aimed at resolving direct tax related disputes&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/7-pm-vivad-se-vishwas-may-help-clear-the-backlog-of-pending-tax-cases-29th-february-2020\/\">Continue reading <span class=\"screen-reader-text\">7 PM | Vivad Se Vishwas may help clear the backlog of pending tax cases| 29th February 2020<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":49370,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[130],"tags":[],"class_list":["post-56266","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-7-pm","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2019\/07\/7-PM.png?fit=1000%2C500&ssl=1","views":{"total":0,"cached_at":"","cached_date":1704801288},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/56266","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=56266"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/56266\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/49370"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=56266"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=56266"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=56266"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}