The revenue
department has not seen a single deposit, owing to the outbreak of the COVID-19
pandemic.
Illustration: Dominic Xavier
The deadline for the
government’s ambitious direct tax settlement scheme - Vivad se Vishwas - is
likely to be extended by three months till September 30.
The revenue department has
not seen a single deposit, owing to the outbreak of the COVID-19 pandemic, said
people in the know.
“The
Centre wants to provide enough opportunity to taxpayers to avail of this
one-time chance to settle disputes.
"But
companies are witnessing negative growth and significant reduction in cash
flows due to the lockdown, which may not allow them to function fully at least
till the end of the first quarter,” said one of the persons cited above.
According to him, a bulk of
the tax receipts may not happen and any extension in deadline may give
companies more time to take a call.
By then, both public sector
and private sector offices would have opened and the management would be able
to take a more informed decision.
Interestingly, the
income-tax (I-T) department has again set a tall budgetary direct tax
collection target at Rs 13.19 trillion - 28 per cent more than the actual
collection in the last fiscal year ended March 31.
India collected Rs 10.27
trillion of direct taxes - 12.2 per cent lower - of the Revised Estimates of Rs
11.7 trillion in 2019-20.
“This year’s tax collection
will hinge on the pandemic. Many sectors have been directly impacted by it,”
said a tax official.
Sources said the government
wanted 100 per cent resolution under the scheme and expects to mop up at least
Rs 1.5 trillion.
However, with the pandemic,
a clearer picture will emerge only in the second quarter of this fiscal year,
said experts.
Even after the Covid-19
curve flattens, the economy will still see muted growth.
Since the scheme is
scheduled to close on June 30, settlement of any dispute under the scheme will
not attract any penalty or interest.
Tax dispute settlement
under the scheme was to be allowed without payment of any interest or penalty
till March 31, 2020.
A penalty of 10 per cent of
the disputed tax amount had to be paid if dispute was settled under the scheme
after March 31 but before closure of the scheme on June 30.
Some big taxpayers, such as
foreign banks and central public sector companies, approached the I-T
department, but they have put their plans on hold till the situation improves.
An internal data of the tax
department said it had approached 10,000 entities to avail of the scheme.
Of this, 2,000 assessees -
involving a tax demand of Rs 3,000 crore - have agreed to come under the
scheme.
According to an estimation
by the I-T department, 80,332 appeals of direct taxation - involving tax effect
of Rs 4.5 trillion - have been pending before fora, including commissioner
appeals, income-tax appellate tribunals, high courts, the Supreme Court, and
dispute resolution panels.
Earlier, the impression was
that over Rs 9 trillion of tax demands have been stuck at various judicial fora
concerning 480,000 cases.
Sources, however, said
foreign firms are enthusiastic about opting for the scheme owing to the
depreciation in the rupee, but no confirmation from them had come to the tax
department.
Tags
Economy