Welcome scheme to reduce I-t Disputes

Income tax demands are a huge source of tension. Over the years they have ballooned into a pile of disputes dragging down both the government and taxpayer. It is therefore welcome that the Union government is moving quickly to offer closure on easy terms to those fighting tax disputes. Announced in the Union Budget, the ‘Vivaad Se Vishwas’ scheme has now been moved as an amendment Bill in Parliament; it will offer a one-time settlement on payment of 50% of the disputed amount in cases where the income tax department has filed an appeal. Where the taxpayer is the litigant, the full amount of the disputed tax will need to be paid, but penalty and interest, which are often more than the principal demand, will be waived.

There are a whopping half-a-million tax disputes pending, with as much as Rs 9.32 lakh crore at stake. So it is commendable that the I-T department, without even the ‘Vivaad’ scheme being approved by Parliament, is racing to settle as many disputes as possible before March 31. After that date, the taxpayer will have to pay a 10% top-up on the full disputed tax amount. Letters have been sent out asking companies and individual taxpayers to approach their circle officer for a settlement. Even public sector units (PSUs) are being chased. 

It makes eminent sense to lower the decibel level and ensure some chunk of the frozen amounts begin to flow as revenue to the government. Cutting through the red tape also sends out the right signal where ease of business is concerned. The ever-changing tax regime has proved to be a major deterrent to foreign investment flows, and the new settlement scheme can work wonders. There are some ambiguities in the scheme, though. It’s not clear if it is open-ended or will close on June 30, as announced earlier. Again, does it apply to those cases too that have been remanded from a court for reassessment of facts by the I-T department? On the whole though, it is a good initiative to make our hugely complex income tax regime easier.