The government has introduced a bill in Lok Sabha, which aims to significantly reduce the huge tax disputes linked to direct taxes totalling £93 billion, unlock revenues for the Centre and provide relief for tax payers but bars cases involving undisclosed foreign assets and income.
The provisions of the bill shall be applicable to appeals filed by taxpayers or the government, which are pending with the commissioner (appeals), Income tax appellate tribunal, high court or the Supreme Court as on January 31, 2020, irrespective of whether demand in such cases is pending or has been paid.
The pending appeal may be against disputed tax, interest or penalty in relation to an assessment or reassessment order or against disputed interest, disputed fees where there is no disputed tax. The appeal may also be against the tax determined on defaults in respect of tax deducted at source or tax collected at source, according to the finance ministry.
With regard to appeals linked to disputed tax, the declarant shall only pay the whole of the disputed tax if the payment is made before the March 31, 2020 and for the payments made after that date but on or before the date notified by central government, the amount payable shall be increased by 10% of disputed tax.
In appeals linked to disputed penalty, interest or fee, the amount payable by the declarant shall be 25% of the disputed penalty, interest or fee, as the case may be, if the payment is made on or before the March 31, 2020. If payment is made after the March 31, 2020 but on or before the date notified by Centre, the amount payable shall be increased to 30% of the disputed penalty, interest or fee, as the case may be, according to the provisions of the bill.
The bill made it clear that provisions of the Act shall not apply - in respect of tax arrears relating to an assessment year, under which an assessment has been made under section 153A or section 153C of the Income-tax Act. It will also not apply relating to an assessment year in respect of which prosecution has been instituted on or before the date of filing of the declaration. Any undisclosed income from a source located outside India or undisclosed asset located outside India, relating to an assessment or reassessment made on the basis of information received under a tax agreement, if it relates to any tax arrear, will also not be allowed.
Tax experts called for extending the deadline of March 31. “While the measure is much needed given the number of pending direct tax cases in India, given the stringent window available to taxpayers for withdrawing their appeals and opting for the scheme, number of taxpayers, who will be able to avail of the scheme by March 31 may be limited. It will be good if the timeline can be extended,” said Shefali Goradia, partner at consulting firm Deloitte India.