Scope of Direct Tax Bill enlarged

Syllabus subtopic: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.

Prelims and Mains focus: about the new amendments made; about Direct Tax Bill and its significance

News: The Union Cabinet approved widening of the scope of the ''Direct Tax Vivad se Vishwas Bill, 2020''.

Background

The Bill, introduced in the Lok Sabha during the ongoing Budget session, sought to substantially reduce the huge tax arrears which are locked in litigation between the taxpayers and the revenue at the level of Commissioner (Appeals), Income Tax Appellate Tribunal (ITAT), High Courts and the Supreme Court.

The amount of disputed direct tax arrears totalled Rs 9.32 lakh crore till November 2019.

What change has been made in the bill?

The bill will now also cover cases pending in debt recovery tribunals (DRTs).

As per the proposed amendments, now income tax disputes in arbitration, various tribunals, courts and DRT cases can be settled.

Even the search and seizure cases where the recovery is below Rs 5 crore too could be redressed under the scheme.

Benefits

As per the Bill, the biggest advantage of the scheme is that the taxpayer would be required to pay only the amount of the disputed taxes. The taxpayer will get complete waiver of interest in case he pays the due amount by March 31, 2020.

For disputed penalty, interest and fee not connected with the disputed tax, the taxpayer would be required to pay only 25 per cent for settling the dispute.

The amount to be paid would be higher, in case the taxpayer opts for the scheme late and pays after March 31, 2020. This provision is aimed at encouraging the taxpayers to settle the dispute within the current financial year itself which ends on March 31, 2020.

Source: The Hindu

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