Vivad se Vishwas scheme: Interest, penalty waived for entire scheme period

The extension has come after the country has gone into lockdown mode due to the increase in cases of those infected by the coronavirus.

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The income tax department on its Twitter handle has been tweeting FAQs related to the scheme to clarify provisions and other aspects of the scheme.
The government has extended the deadline for settling tax disputes under the Vivad se Vishwaas scheme without paying any interest and penalty to June 30, 2020 from March 31, 2020. This was announced by the Finance Minister Nirmala Sitharaman in a press conference today.

As the scheme is scheduled to close on June 30, 2020 this means that settlement of any dispute under the scheme now onwards till June 30 will not attract any penalty or interest. As per the original scheme, when launched, tax dispute settlement under the scheme was to be allowed without payment of any interest or penalty only till March 31, 2020. A penalty of 10% of disputed tax amount had to be paid if dispute was settled under the scheme after March 31 but before closure of scheme on June 30.

The extension has come after the country has gone into lockdown mode due to the increase in cases of those infected by the coronavirus. Many chartered accountants and income tax officials hade urged the government for an extension as the scheme came into effect quite late - from March 17, 2020 and related forms and other rules of the scheme were notified on March 18, 2020. Thus, going by the earlier deadline of March 31, only 12 days would have been left to meet the deadline, after notification of forms/rules.


Why the extension is good news for tax litigants
The extension of the deadline will come as relief for those individuals who want to settle their tax disputes without paying additional 10 per cent penalty and interest. The extension will also give a breather to those individuals who were yet to do a cost-benefit analysis of the scheme and decide whether to opt for it or not.

What is Vivad se Vishwas scheme?
This is a direct tax scheme announced in Budget 2020, for settling tax disputes between individuals and the income tax department. Earlier, the scheme offered complete waiver on interest and penalty to the taxpayers with a full and final settlement of the dispute if the scheme was availed by March 31, 2020. An individual opting for settlement after March 31, 2020 was required to pay additional 10 per cent penalty on the disputed tax amount.

As per the scheme income tax disputes settled under it cannot be reopened in any other proceeding by the income tax department or any other designated authority.

The income tax department on its Twitter handle has been tweeting FAQs related to the scheme to clarify provisions and other aspects of the scheme.
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