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Wednesday, October 21, 2020

Vivad se Vishwas scheme: Declarations can be filed even where prosecution notice has been issued

The CBDT had, on March 4, issued a detailed FAQs on the scheme. In its Wednesday circular, the department has modified the answer to a question pertaining to prosecution cases with a view to “reflect the correct intent of law”.

By: ENS Economic Bureau | New Delhi | April 23, 2020 3:36:57 am
vivad se vishwas bill, tax bill, union budget vivad se vishwas bill, budget 2020, direct tax, direct tax litigation, indian express In the Union Budget 2020-21, the Centre had announced the Vivad Se Vishwas. (File Photo)

In another set of FAQs on the Vivad se Vishwas dispute resolution scheme, the Central Board of Direct Taxes (CBDT) on Wednesday clarified that entities against whom notice has been issued without prosecution being instituted can avail the scheme. In cases where prosecution has been instituted for an assessment year, the prosecution will have to be compounded before filing declaration under the scheme, it said.

The CBDT had, on March 4, issued a detailed FAQs on the scheme. In its Wednesday circular, the department has modified the answer to a question pertaining to prosecution cases with a view to “reflect the correct intent of law”. “It has now been clarified that where only notice for initiation of prosecution has been issued without prosecution being instituted, the assessee is eligible to file declaration under Vivad se Viswas,” the CBDT said.

In the March 4 FAQs, the CBDT said that where notice for initiation of prosecution has been issued with reference to tax arrears, the taxpayer has a choice to compound the offence and opt for Vivad se Vishwas. However, the scheme will not cover cases where prosecution has already been instituted and is pending in the court.

“This circular clarifies that where notice for initiation of prosecution has been issued without prosecution proceedings being instituted, the assessee would be eligible to file declaration under Vivad se Vishwas,” Nangia Andersen LLP director Sandeep Jhunjhunwala said. Consulting firm AKM Global tax partner Amit Mahes-hwari said that earlier, there was a lack of clarity on applying for Vivad se Vishwas scheme when prosecution proceedings had been initiated and instituted.

In the Union Budget 2020-21, the Centre had announced the Vivad Se Vishwas. In cases where a taxpayer’s appeals are pending before appellate forums, high courts and the Supreme Court, he will have the option to settle the dispute on payment of 100 per cent tax (125 per cent in search cases) and get complete waiver of interest and penalty if he pays by June 30.

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