Vivad Se Vishwas Bill, 2020 introduced in Lok Sabha; It seeks to settle direct tax disputes worth Rs 9.32 lakh crore

Union Minister for Finance Nirmala Sitharaman has introduced 'Direct Tax Vivad Se Vishwas Bill2020' in the Lok Sabha. The bill aims to resolve disputes related to direct tax payments.

The Direct Tax Vivad se Vishwas Bill, 2020, offers a waiver of interest, penalty and prosecution for settlement of these disputes.

Earlier on February 1, 2020, the Finance Minister introduced Vivad Se Vishwas (dispute to trust) scheme during her budget speech. The scheme aims at resolving disputed tax cases involving Rs 9.32 lakh crore that has been stuck for more than a year through 483,000 direct tax disputes pending in various tribunals.

Introducing the Bill, FM Sitharaman said the scheme bill emphasises on trust-building and will reduce litigation expenditure for the government, which may help it in generating some revenue. She added, the bill provides a formula-based solution without any discrimination.

What is Vivad Se Vishwas scheme?

It offers a complete waiver on interest and penalty to the taxpayers, if the disputed amount is paid before March 31, 2020. If a taxpayer is not able to pay direct taxes by March 31 then, he will get further time till June 30, 2020. However, in that case, he would have to pay 10 per cent more on the tax. The scheme aims to benefit those whose tax demands are locked in dispute in multiple forums.

Bill faced stiff opposition

The Bill was allowed to be presented in the Lok Sabha after stiff opposition from the Congress members Adhir Ranjan Chaudhury and Dr Shashi Tharoor. Congress member Adhir Ranjan Chaudhury took serious exception on the title of the bill as it is in bi-lingual. He also quoted the rule under which a bill has to be laid. He alleged that the government is subtly imposing Hindi. He also said that the government is trying to favour business class through his bill who have declared a huge amount during the demonetization took place.

Dr Tharoor also opposed that by introducing this bill, the government's fiscal collection will come down.

However, the bill was allowed to be introduced by voice vote after the Finance minister assured the house that the bill was aimed only to ease the taxpayer who was otherwise needed to go to court to defend his case, the government has brought a structured and formula-based solution to the dispute.

Sabka Vishwas Scheme

Earlier, the FM Sitharaman had announced a similar scheme, titled, Sabka Vishwas Scheme, in her first Budget in July 2019. Sabka Vishwas Scheme was launched to reduce litigation in indirect taxes. It resulted in settling over 1,89,000 cases.