Tax Alert: Amendments Proposed In The Direct Tax Vivad Se Vishwas Bill, 2020

With an aim to reduce the pending litigations, The Direct Tax Vivad Se Vishwas Bill, 2020 (the Bill) was tabled in the Lower House of the Parliament on 5 February 2020 ( Click here to read our analysis of the Bill). Subsequently, various representations were made by the stakeholders. Pursuant to such representations, a notice for moving the amendments¹ to the provisions of the Bill was given to the Parliament. We, at BDO in India, have analyzed and summarized the key amendments proposed in the Bill.

1. Scope Enlargement:

While the Bill covers pending litigations, it is proposed to expand the applicability of the Bill by covering the following instances:

Tax Officer or First Appellate Authority or Tax Tribunal or High Court has passed the order and the time limit for filing appeal has not expired as on 31 January 2020;
Cases pending before the Dispute Resolution Panel (DRP) as on 31 January 2020;
DRP has issued direction(s) but the tax officer has not passed final order on or before 31 January 2020;
Revision petition filed under section 264 of the Income-tax Act, 1961 (the IT Act) is not disposed off on or before 31 January 2020;
Search cases where disputed tax amount is less than INR 50 Mn.

2. 'Disputed Tax' definition substituted

The Bill contained formula for computing disputed tax amount. It is now proposed to substitute the formula-based computation with the following:

Sr. No.	Status of case as on 31 January 2020	Definition of disputed tax*
1.	Appeal, writ petition or special leave petition (SLP) pending before the appellate forum	Tax payable if such appeal / writ / SLP is decided against the taxpayer
2.	Order in an appeal or in writ petition has been passed by the appellate forum and the time limit for filing appeal or SLP has not expired	Tax payable after giving effect to the order so passed
3.	Order has been passed by the Tax Officer on or before 31 January 2020 and the time limit for filing appeal against such order has not expired	Tax payable in accordance with such order
4.	Objections are yet to be disposed off by DRP	Tax payable if DRP was to confirm the proposed variation in the draft order
5.	DRP has issued directions but the Tax Officer is yet to pass final order	Tax payable as per final order
6.	Pending revision petition filed under section 264 of the IT Act	Tax payable if such revision application was not to be accepted

*Tax is inclusive of surcharge and education cess

Where First Appellate Authority has issued enhancement notice under section 251 of the IT Act, the disputed tax computed is to be increased by the amount of tax pertaining to issues for which such notice has been issued.

3. Carry forward of credit for Minimum Alternate Tax (MAT) and loss or depreciation

Where the dispute pertains to either reduction of MAT credit or any loss or depreciation, the taxpayer to have an option to:

include the amount of tax related to such tax credit or loss or depreciation in the amount of disputed tax; or
carry forward the reduced tax credit or loss or depreciation in a prescribed manner.

4. Tax demand to be paid

The revised schedule of tax demand payment along with the quantum is tabulated hereunder:

Particulars	Payable up to 31 March 2020**	Payable from 1 April 2020 up to the last date to be notified **
Cases involving disputed tax, interest and penalty All eligible cases (except search cases) Search cases	100 % of the disputed tax 125 % of the disputed tax	110% of the disputed tax 135 % of the disputed tax
Cases involving disputed penalty or interest or fee	25% of disputed penalty or interest or fee	30% of disputed penalty or interest or fee
** In the following cases, only 50% of the disputed tax/interest/penalty/fine as calculated above would be payable: Where the taxpayer has filed objection / appeal before the DRP / First Appellate Authority / Tax Tribunal, as the case may be, and the issue is already covered in favor of the taxpayer in its own case by a decision of Tax Tribunal / High Court / Supreme Court, as the case may be; or The appeal is filed by the Revenue Authority.

5. Amendment proposed in dispute resolution procedure

The Bill provided that where the taxpayer has filed any appeal or writ petition before the High Court or the Supreme Court, such an appeal or writ petition should be withdrawn with leave of the Court and a proof of such withdrawal along with the declaration should be filed with the Designated Authority. It is now proposed that proof of such withdrawal shall be submitted along with intimation of payment i.e. after issuance of certificate by the Designated Authority containing particulars of the tax arrear and the amount payable and not along with the declaration.

6. Clarification on recurring issues

It is proposed to clarify that making a declaration shall not set any precedence for any proceedings and neither the Revenue Authority nor the taxpayer can claim in any other proceeding that they had conceded their tax position by settling the dispute.

7. Refund of excess tax paid before filing of declaration

It is proposed that the taxpayer shall be entitled to a refund of excess amount in cases where the taxpayer has paid any amount under the IT Act in respect of his tax arrear which exceeds the disputed tax amount. However, the taxpayer would not be entitled to interest on such excess amount.

BDO Comments

While the amendments are subject to approval of and passing by the Parliament and receiving President's assent, the same have provided much needed clarity on certain key issues such as refund of excess taxes paid, carry forward of MAT credit and/or losses, partly unfavorable orders, inclusion of small value search cases etc.

Footnote

1 As uploaded on taxsutra's website

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.