Deadline for tax settlement scheme may be extended

The revenue department has not seen a single deposit, owing to the outbreak of the COVID-19 pandemic.

Tax
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.




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