CBDT clarifies Direct Tax Vivad se Vishwas Scheme, 2020, withdraws Circular

The Central Board Direct Tax (CBDT)  issued a clarification on Direct Tax Vivad se Vishwas Scheme, 2020 wherein the Board has updated the Frequently Asked Questions (FAQs)issued after the introduction of the same.

Pursuant to Budget announcement, the Finance Minister announced the `Vivad se Vishwas’ Scheme to provide for dispute resolution in respect of pending income tax litigation following which, the Direct Tax Vivad se Vishwas Bill, 2020 (the Bill) was introduced in the Lok Sabha on 5th Feb, 2020.

Subsequently, the Board issued a list addressing several queries received from the stakeholders seeking clarifications in respect of various provisions of the Bill. The Government had considered these queries and had decided to clarify the same in the form of answers to frequently asked questions (FAQs) vide circular no 7 of 2020 dated 4th March 2020. With the present circular, the Board has informed that the old circular published on 4^th March is withdrawn.

“After introduction of Vivad se Vishwas in Lok Sabha, several queries have been received from the stakeholders seeking clarifications in respect of various provisions contained in the Scheme. After considering various queries received from stakeholders, CBDT has clarified the same in the form of answers to frequently asked questions (FAQs) vide Circular No.7/2020 dated 04.03.2020. The FAQs contain clarifications on scope/eligibility, calculation of disputed tax, procedure related to payment of disputed tax, and consequential benefits to the declarant,” the circular said.

The circular clarified that the Vivad se Vishwas is not available for disputes pending before AAR. However, if the order passed by AAR has determined the total income of an assessment year and writ against such order is pending in HC, the appellant would be eligible to apply for the Vivad se Vishwas.

If an appeal has been filed against imposition of fees under sections 234E or 234F of the Act, the appellant would be eligible to file a declaration for a disputed fee and the amount payable under Vivad se Vishwas shall be 25% or 30% of the disputed fee.

If the fee imposed under section 234E or 234F pertains to a year in which there is disputed tax, the settlement of disputed tax will not settle the disputed fee. If the assessee wants to settle a disputed fee, he will need to settle it separately by paying 25% or 30% of the disputed fee.