Vivad Se Vishwas Scheme - Implication on 110% Tax Rule

Hon’ble Finance Minister Smt. Nirmala Sitharaman in her budget speech on 01.02.2020, announced Direct Tax Amnesty Scheme “Vivad se Vishwas” for tax payers to settle their tax disputes.   

The Vivad se Vishwas bill got the assent from President on 17.03.2020 and it became "The Direct Tax Vivad Se Vishwas Act, 2020" w.e.f. 17.03.2020. Ministry of Finance via Notification No. 18/2020 also announced the Rules to apply this Act on 18.03.2020 which is called as "The Direct Tax Vivad Se Vishwas Rules, 2020". These rules contain 5 Forms which would be applicable on the assessee who want to avail the benefit of this Act which are as follows:

• Form 1 (Declaration by assessee)
• Form 2 (Undertaking by assessee to waive all rights relating to disputed appeal)
• Form 3 (Certificate by Designated Authority to pay off the final disputed amount)
• Form 4 (Declaration by assessee regarding withdrawal of appeal and payment of tax)
• Form 5 (Final order by Designated Authority)

All these forms will be filed online by taxpayer through its Income Tax portal. First of all file Form 1 and 2 by taxpayer who want to avail the benefit of this Act. After filing these forms an acknowledgement from the Income Tax Department will be issued. Within 15 days of filing of these forms, one certificate will be issued by Designated Authority in Form 3 showing the final tax amount which need to be paid within 15 days of receipt of such certificate (In Rules this time limit is 30 days). After making payment of tax amount as per certificate in Form 3, taxpayer would be required to file Form 4 declaring that I have withdrawal my appeal and also paid applicable tax. After analyzing all the declaration and after being satisfied, designated authority will issue an order for full and final settlement of Tax Arrear in Form 5.

It may be noted that at the time of announcement of this scheme, time frame decided to avail this scheme was 31.03.2020 (For making 100% tax payment) and 30.06.2020 (For making 110% tax payment).

However, now due to Corona outbreak the relaxation has been provided to make payment of 100% of tax upto 30.06.2020 which is a welcome step from the government.

All these forms are now available online and interested taxpayer may avail its benefit by applying it through Income Tax Portal.