A quarter of all direct case disputes have opted for resolution under the Vivad se Vishwas scheme which involves Rs 97,000 crore in tax demands, sources in the department of revenue said on Friday. They added that the scheme is an overwhelming success compared with similar offers launched in 1998 and 2016.
Although the quantum of the final revenue proceeds to the government is not clear, the Centre will not receive the entire amount as the scheme offered attractive discounts. Besides, a part of tax demands is required to be deposited with the government when an assessee challenges the verdict in higher appellate forum and this amount would already have been accounted for in various years in the past.
“Vivad se Vishwas was brought by the government in March last year just before the Covid-19 outbreak and has received an overwhelming response in contrast to similar schemes brought in 1998 and in 2016,” a source said.
Over 1.25 lakh cases have opted for the scheme, which is 24.5% of the more than 5.10 lakh disputes pending in different forums. The response to the scheme is 15 times more than the 2016 scheme called Direct Tax Dispute Resolution Scheme. “The 1998 scheme could only mop up Rs 739 crore with just a few thousand cases while the one in 2016 managed to resolve just 8,600 cases involving a tax demand of Rs 631 crore,” another source said.
The wide variety of cases allowed to participate in the scheme has contributed to its success which included all appeals or SLPs pending in Supreme Court till January 31, 2020. Besides, it covered cases pending before Dispute Resolution Panel (DRP), and those where directions have been issued but order not passed by DRP.
The resolution scheme is in force till February 28 after the deadline was extended a few times owing to pandemic-related restrictions.
The scheme launched in the Budget last year said that if the appeal is filed by the income tax department or the department has lost on an issue, then the assessee has to pay 50% of the disputed tax while the penalty and interest would be waived off.
In these cases, if the dispute is related to only penalty and interest then taxpayer has to pay only 12.5% of the disputed amount.
For case filed by the assessee in the higher forum, they have to pay 100% of the disputed tax (125% of disputed tax in case of search cases) while penalty and interest would be waived off. If the dispute is only about penalty and interest then 25% of the disputed penalty and interest is payable.