OBJECTIVE Honourable Finance Minister Nirmala Sitharaman, in the Speech of Budget 2020-21, proposed to introduce The Direct Tax Vivad se Vishwas Act, 2020 for dispute resolution related to direct taxes. Similar scheme known as the 'Sabka Vishwas' was introduced in 2019 for dispute resolution under Legacy Indirect Taxes. The Direct Tax Vivad se Vishwas Bill, 2020 was introduced in the parliament on 5th February, 2020. In this webinar, we shall under the provisions of the Bill and the Rationale for its Introduction.

1. The Direct Tax Vivad Se Vishwas
Bill, 2020
CA Divakar Vijayasarathy

2. Credits & Acknowledgements
V Thirumal
CA Jugal Gala

3. Legends Used
CBDT Central Board of Direct Taxes
CG Central Government
CIT(A) Commissioner of Income-tax (Appeals)
DRP Dispute Resolution Panel
FM Finance Minister
HC High Court
ITAT Income-tax Appellate Tribunal
SC Supreme Court
Act - Direct Tax Vivad se Vishwas Act, 2020

4. Presentation Schema
Introduction
Performance of
‘Sabka
Vishwas’
Rationale
The Direct Tax
Vivad se
Vishwas Bill,
2020
Definitions
Amount
Payable
Declaration
Time and
Manner of
Payment
Restriction on
Proceedings
and Non-
applicability
Miscellaneous Comparison Caveats
Statistics

5. Introduction
Honourable Finance Minister Nirmala Sitharaman, in the
Speech of Budget 2020-21, proposed to introduce The
Direct Tax Vivad se Vishwas Act, 2020 for dispute
resolution related to direct taxes.
The Direct Tax Vivad se
Vishwas Bill, 2020 was
introduced in the Parliament
on 5th February, 2020.
In the last budget, ‘Sabka Vishwas’ Scheme was brought in to
reduce litigation in legacy indirect taxes (Service, Excise and others)
The proposed Act would provide opportunity for Taxpayers
to pay disputed taxes with waiver of penalty and interest
and partial waiver of pending penalties, interests, and fees.
FM has declared that the Scheme would
remain open until 30th June 2020.
‘Vivad se Vishwas’ -> ‘Dispute to Trust’

6. Performance of ‘Sabka Vishwas’
Sabka Vishwas Scheme resulted in
settling over 1,89,000 cases
Total 1,89,215 applications involving a
total duty of ₹ 89,823.32 crore were filed
Duty payable being ₹ 39,591.91 crore (₹
24,770.61 crore pre-deposit and ₹
14,821.30 crore freshly payable)
The Scheme was initially open until 31st December, 2019
and was extended until 15th January 2020

7. Rationale
Over the years, the pendency of appeals filed by taxpayers as well as Government has increased
This is due to the fact that the number of appeals that are filed is much higher than the number
of appeals that are disposed.
As a result, a huge amount of disputed tax arrears is locked-up in these appeals.
Currently, there are 4,83,000 direct tax cases pending in various appellate forums i.e.
CIT(A), ITAT, High Court and Supreme Court.
As on the 30th November, 2019, the amount of disputed direct tax arrears is ₹9.32 lakh
crores.
Considering that the actual direct tax collection in the FY 2018-19 was ₹11.37 lakh crores, the
disputed tax arrears constitute nearly one year direct tax collection
Thus, the scheme is proposed to reduce litigation and clear off deadlocks in arrears

8. The Direct Tax Vivad se Vishwas Bill, 2020

9. Definitions

10. Relevant Definitions – Sec 2
Disputed tax
Tax on Income
Assessed as per
Normal
Provisions
Tax on Income
Assessed less Disputed
Income as per Normal
Provisions
MAT or AMT on
Income Assessed
MAT or AMT on
Income Assessed
less Disputed
Income
A B C D
1
2 The amount of TDS or TCS under Dispute
Shall be ignored if not applicable
In case an appeal has the effect of reducing returned losses or converting it
into income – the disputed tax shall be the tax only on such disputed income

11. Contd..
Designated
Officer
An officer not below the rank of a Commissioner of Income-tax notified
by the Principal Chief Commissioner for the purposes of this Act
Appellant
Appellant means the person or the income-tax authority or both who has
filed appeal before the appellate forum and such appeal is pending on
the 31st January 2020
Appellate
Forum
means the Supreme Court or the High Court or the Income Tax
Appellate Tribunal or the Commissioner (Appeals)
Declarant means a person who files a declaration under the Scheme
Tax arrear
The aggregate amount of
 Disputed tax, interest chargeable or charged on such disputed tax, and
penalty leviable or levied on such disputed tax; or
 Disputed interest; or
 Disputed penalty; or
 Disputed fee

12. Contd..
Disputed
fee
means the fee determined under the provisions of the Income-tax Act,
1961 in respect of which appeal has been filed by the appellant
Disputed
interest
means the interest determined under the provisions of the Income-tax
Act, 1961, where—
(i) such interest is not charged or chargeable on disputed tax
(ii) an appeal has been filed by the appellant in respect of such interest
Disputed
Income
in relation to an AY, means the whole or so much of the total income as
is relatable to the disputed tax
Disputed
penalty
Penalty determined under the provisions of the Income-tax Act, 1961,
where—
(i) such penalty is not levied or leviable in respect of disputed income or
disputed tax;
(ii) an appeal has been filed by the appellant in respect of such penalty

13. Amount Payable, Declaration and Time &
Manner of Payment

14. Amount Payable – Sec 3
Tax Arrear
Amount Payable
On or Before 31st March 2020 On or After 1st April 2020
Disputed Tax and Interest
& Penalty on such
Disputed Tax
Amount of Disputed Tax
Amount of Disputed Tax +
10%
However, if the 10% exceeds
the interest & Penalty on
disputed tax, the excess shall
be ignored
Disputed Interest, Disputed
Penalty or Disputed Fee
25% 30%
Where Declaration is filed before the last date, amount payable shall be:

15. Illustration
At the time of assessment, the Assessing Officer disallowed claims of Rs. 40,00,000 – out of which A
Pvt Ltd preferred an appeal for Rs. 30,00,000. The tax on the appealed amount of Rs. 30,00,000 was
Rs. 7,00,000 including interest of Rs. 50,000 under Sec 234B
The disallowance resulted in additional interest of Rs. 1,00,000 out of which Rs. 60,000 was relating
to appealed amount of Rs. 30,00,000
A Pvt Ltd has preferred an appeal to CIT(A) of the entire amount of Rs. 7,60,000 (Rs. 7,00,000 of
disputed tax + Rs. 60,000 of additional interest)
For A Y 2017-18, A Pvt Ltd filed its return of income offering Rs. 1,00,00,000 of total income. The
total tax paid on the total income was Rs. 20,00,000.
Compute the disputed tax, disputed interest amount and the amount to be paid to opt for Vivad se
Vishwas Scheme assuming no non-applicability and the application is made:-
- On 01.03.2020
- On 05.04.2020
Ignore MAT provisions

16. Solution
Particulars (Amount in Rs.) Application made on
01.03.2020 (Amount in Rs.)
Application made on
05.04.2020 (Amount in
Rs.)
Disputed Income (1,00,00,000 –
70,00,000)
30,00,000 30,00,000
Disputed Tax (excluding interest on
such disputed tax)
6,50,000 6,50,000
Interest on such disputed tax* 50,000 50,000
Disputed Interest** 60,000 60,000
Amount Payable for disputed tax
(1)
6,50,000 7,00,000 (6,50,000 + (10%
of 6,50,000, restricted to Rs.
50,000 of interest))
Amount payable for disputed
interest (2)
15,000 (25% of Rs. 60,000) 18,000 (30% of Rs. 60,000)
Total amount payable under the
scheme (1+2)
Rs. 6,65,000 Rs. 7,18,000
* Shall not include disputed interest
** which results out of disallowance

17. Filing of Declaration – Sec 4
Upon filing of Declaration any Appeal or writ pending before the CIT(A), ITAT, HC or SC shall be
deemed to have been withdrawn from the date on which certificate is issued by Designated
Authority
Where the Declarant has initiated any proceedings under DTAA, he/she shall withdraw the
same before filing declaration
Declaration shall be filed by the declarant before the Designated
authority in such form and verified in such manner as may be prescribed
Documents to be
Furnished
 Proof of Withdrawal
 An undertaking waiving his right, whether direct or indirect, to
seek or pursue any remedy or any claim in relation to the tax
arrear which may otherwise be available to him under any law

18. Presumption of No Declaration
The declaration shall be presumed never to have been made if
Any material particular furnished
in the declaration is found to be
false at any stage
The declarant violates any of
the conditions
The declarant acts in any manner
which is not in accordance with the
undertaking given by him
Honourable SC or HC or ITAT or CIT(A) or arbitrator, conciliator or mediator
shall not proceed to decide any issue relating to the tax arrear for which an
order has been passed by the Designated Authority under this Act

19. Time and Manner of Payment – Sec 5
and grant a certificate to the declarant containing particulars of
the tax arrear and the amount payable after such determination
by order, determine the amount payable by the declarant in
accordance with the provisions of this Act
The designated authority shall, within a period of 15 days from the
date of receipt of the declaration,
The declarant shall pay
the amount within 15
days of the date of receipt
of the certificate
and intimate the details of
such payment to the
designated authority in the
prescribed form
and thereupon the designated
authority shall pass an order
stating that the declarant has
paid the amount

20. Restriction on Proceedings and Non-
applicability

21. Restriction on Further Proceedings – Sec 5 &
Sec 6
Order passed,
determining the
amount payable
under this Act,
shall be
conclusive and
matter
covered by such order shall
not be reopened in any other
proceeding under the
Income-tax Act or under any
other law or bilateral
agreement
The designated authority shall not
 institute any proceeding in respect of an offence; or
 impose or levy any penalty; or
 charge any interest
under the Income-tax Act in respect of tax arrear

22. No Refund or Immunity
• Any amount paid in pursuance of a declaration shall
not be refundable under any circumstances
• Money shall not be refunded even if declaration is void
Sec 7
Provision of the Act shall not be construed as
conferring any benefit, concession or immunity on the
declarant in any proceedings other than those in
relation to which the declaration has been made
Sec 8

23. Non-Applicability – Sec 9
The provisions of this Act shall not apply:
In respect of tax arrear:
relating to an AY in respect of which an assessment has been made under
Search and Seizure (tax arrears of block assessment years excluded
but arrears of search year eligible for application)
relating to an AY in respect of which prosecution has
been instituted on or before the date of filing of declaration
relating to 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 TIEA - Tax Information Exchange
Agreements
relating to an appeal before the CIT(A) in respect of which notice of
enhancement of income or penalty has been issued on or before the 31st
January 2020

24. Non-Applicability – Sec 9
To Any person in respect of whom an irrevocable order of detention has been made
under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act,
1974 on or before the filing of declaration
To any person in respect of whom prosecution
• for any offence punishable under the provisions of
o the Indian Penal Code,
o the Unlawful Activities (Prevention) Act, 1967,
o the Narcotic Drugs and Psychotropic Substances Act, 1985,
o the Prevention of Corruption Act, 1988,
o the Prevention of Money Laundering Act, 2002,
o the Prohibition of Benami Property Transactions Act, 1988 or
• for the purpose of enforcement of any civil liability
has been instituted on or before the filing of the declaration
or
such person has been convicted of any such offence punishable under any of those Acts
To any person notified for committing an offence in securities as per the Special Court (Trial of
Offences Relating to Transactions in Securities) Act, 1992 on or before the filing of declaration
The provisions of this Act shall not apply:

25. Miscellaneous Provisions,
Comparison and Caveats

26. Miscellaneous Provisions
Sec 10
Grants power to CBDT issue directions for the
purpose of implementation of the Act
Sec 11
• CG shall have the power to make an order to remove
difficulties in giving effect to the Act
• Such order shall be presented for consent before both the
Houses of Parliament
• No order shall be made after 2 years of coming into force
Sec 12
• CG may prescribe rules for carrying out provisions of the Act
• Rules shall be presented for consent before both the Houses
of Parliament

27. Comparison
Sabka Vishwas Scheme, 2019 Vivad se Vishwas Scheme, 2020
For Legacy Indirect Tax Laws For Income Tax
Covers dues from Appeals, Arrears and
Voluntary Disclosures
Covers only dues from Appeals
Amount Payable
For Appeal cases –
70% from the duty demand if it is ₹ 50 Lakh or
less and 50% if it is more than ₹ 50 Lakh
For Tax Appeal cases –
Entire tax amount
Only waiver of interest and penalty
For Arrear cases –
60% of the confirmed duty amount if the same
is ₹ 50 Lakh or less and it is 40% in other cases
For Interest, Penalty and fees Appeal cases –
25% or 30% as the case may be
For Voluntary disclosures –
Entire amount
No provision for voluntary disclosures

28. Caveats
Cases where notice of enhancement of income or issue of penalty
has been issued by CIT(A) shall be excluded – bias position from the
point of view of assessee
No option to contest any mistake apparent from record – orders with
arithmetical errors will also have to be taken under this route
Time lag between date of filing declaration and payment of final
payment payable before 31.03.2020 seems practically difficult
Exclusion of cases for which time limit of appeal is pending and
cases pending before DRP as on 31st January, 2020

29. Statistics

30. Pendency of Appeals & Tax Effect
Source: Annual Report of Ministry of Finance

31. Appeals under CIT(A) (Nos.)
Source: Annual Report of Ministry of Finance
* Reduction was due to vacancy of Commissioners

32. Thank You!
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