OBJECTIVE The Direct Tax Vivad se Vishwas Bill, 2020 was introduced in the Parliament on 5th February, 2020 and subsequently amended. The webinar shall deal with the frequently asked questions relating to the scheme. It shall discuss the issues faced by the taxpayers in the dispute resolution scheme.

1. Issues in Direct Tax Vivad se
Vishwas Bill, 2020
CA Divakar Vijayasarathy

2. Credits & Acknowledgements
Anand N Krishna
CA Jugal Gala

3. Legends Used
AMT Alternate Minimum Tax
AY Assessment Year
CBDT Central Board of Direct Taxes
CIT(A) Commissioner of Income-tax (Appeals)
DRP Dispute Resolution Panel
ITAT Income-tax Appellate Tribunal
MAT Minimum Alternate Tax
the Act - Income Tax Act, 1961

4. Presentation Schema
Introduction Disputed Tax Appellant Amount Payable
Refund of Excess
Tax
Practical Issues Conclusion

5. Introduction
Tax disputes consume time, energy and resources both on the part of the
Government as well as taxpayers. Moreover, they also deprive the Government of
the timely collection of revenue
Honourable Finance Minister Smt. Nirmala Sitharaman, in her budget speech,
has proposed to bring a scheme to reduce the litigation in the direct taxes
The Direct Tax Vivad se Vishwas Bill, 2020 (“the Bill”) was introduced in
the Lok Sabha on 05-02-2020 for dispute resolution related to direct taxes
There were concerns raised by the tax-payers in relation to coverage of the Bill,
clarifications of specific terminologies, etc.
Revised ‘Direct Tax Vivad se Vishwas Bill, 2020’ was introduced on 14.02.2020
addressing the concerns raised and providing numerous clarifications on its
applicability and viability

6. Amendments in
The Direct Tax Vivad se Vishwas Bill, 2020

7. Definition of Disputed Tax
Nature of case Disputed Tax
Appeal or petition is pending before the
appellate forum on or before 31-01-2020
Amount of tax payable if such appeal was to be decided
against taxpayer
Order has been passed on or before 31-01-
2020 and time limit for filing appeal or
petition against such order has not expired
Amount of tax payable after giving effect to such order
Objections are pending before the DRP on or
before 31-01-2020
Amount of tax payable if DRP was to confirm variation
proposed in the draft order
DRP issued directions but the Assessing Officer
didn't pass an order on or before 31-01-2020
Amount of tax would have been payable had the order
been passed by the Assessing Officer
An application for revision under section 264
filed, is pending
Amount of tax payable by the taxpayer if the application
was to be rejected
CIT(A) has issued an enhancement notice in
disposing of appeal
Amount of disputed tax + Amount of tax in relation to
issues for which notice of has been issued
In cases where disputed is related to reduction of MAT/AMT credit or loss or depreciation computed
thereunder, the taxpayer shall have an option either to include amount of tax related to such tax credit
or loss or depreciation in amount of disputed tax or carry forward the reduced MAT/AMT credit or loss or
depreciation.
The above amounts of tax are including surcharge and cess but excluding interest

8. Definition of Appellant
a) A person in whose case writ/special leave petition is pending before the High Court or the
Supreme Court
b) A person in whose case, an order has been passed by the Assessing Officer or appellate forum
and time limit for filing an appeal or petition against such order has not expired on or before 31-
01-2020
c) A person who has filed an objection with the DRP and no direction has been issued by DRP on
or before 31-01-2020
d) A person against whom directions have been issued by DRP but the Assessing Officer has not
yet passed an assessment order in pursuance of such directions on or before 31-01-2020
e) A person who has filed an application for revision under section 264 and such application is
pending on or before 31-01-2020
Definition of ‘disputed tax’ was amended to remove ambiguities in the erstwhile definition and the
coverage for ‘appellant’ was expanded to include cases of search and seizure and those pending
before DRP

9. Amount Payable
The quantum of amount payable if the appeal is filed by the taxpayer
Type of case
Amount payable up to
31-03-2020
Amount payable on or
after 01-04-2020
I. Cases relating to disputed tax and interest/ penalty on such disputed tax
Includes assessment for search and seizure
operations or power to requisition books of
accounts and the disputed tax does not exceed
Rs. 5 crores
Amount of disputed tax
plus 25% of disputed tax
Amount of disputed tax
plus 35% of disputed tax
Residual Cases Amount of disputed tax
Amount of disputed tax
plus 10% of disputed tax
Note: Where 25% or 35% or 10% of disputed tax, exceeds the total of interest and penalty on disputed tax,
such excess amount shall be ignored
II. Cases relating to disputed interest, disputed
penalty and disputed fee
25% of disputed interest,
penalty or fee
30% of disputed interest,
penalty or fee
However, if appeal is filed for any issues on which the decision has been already favoured for the
taxpayer in earlier years from the higher forums (without further reversal), the amount payable
shall be 50% of the amount mentioned above

10. Contd..
The quantum of amount payable if the appeal is filed by the department
Type of case
Amount payable up to
31-03-2020
Amount payable on or
after 01-04-2020
I. Cases relating to disputed tax and interest/ penalty on such disputed tax
Includes assessment for search and seizure
operations or power to requisition books of
accounts and the disputed tax does not exceed
Rs. 5 crores
50% of disputed tax
plus 12.5% of disputed tax
50% of disputed tax
plus 17.5% of disputed tax
Residual Cases 50% of disputed tax
50% of disputed tax
plus 5% of disputed tax
Note: Where 12.5% or 17.5% or 5% of disputed tax, exceeds the total of interest and penalty on disputed
tax, such excess amount shall be ignored
II. Cases relating to disputed interest,
penalty and disputed fee
12.5% of disputed interest,
penalty or fee
15% of disputed interest,
penalty or fee

11. Withdrawal of Appeals and Claims
The withdrawal of appeals or petitions or claims in any
proceedings or notices by the tax-payer needs to be done after
issuance of certificate stating the amount of payment to be made
as against the erstwhile provision of withdrawal along with filing
of declaration
Proof of Withdrawal (from High Court and Supreme Court)
needs to be submitted along with the intimation of payment by
tax-payer as against the erstwhile provision of submitting at the
time of filing declaration
It shall not be presumed that the parties to the Bill have agreed
on the decision in relation to disputed issue by settling under
this Bill. Thus, if disputed matters arise in future, appeal can be
filed by the tax-payer or department and normal appellate
proceedings shall apply.

12. Refund of Amount
In case amount paid by taxpayer, in respect of its tax arrear (aggregate of disputed tax (including
interest or penalty or fee) + disputed interest + disputed penalty + disputed fee), before filing the
declaration, is more than the amount determined under the Bill, refund shall be granted
No interest shall be granted on such refund
No refund of amount paid by virtue of the Bill, under any circumstances
Illustration
Amount paid towards tax arrears
(Amount in Rs.)
Amount determined under the Bill
(Amount in Rs.)
Further payment to be made or
refund to be granted (Amount in Rs.)
100 110 Payment of 10
100 90 Refund of 10
100 100 No payment
100 300 Payment of 200
Payment of Rs. 10 or Rs. 200 done under the Bill, shall not be refunded under any circumstances
Earlier, the provisions of the Bill read as “no refund shall be granted under any circumstances”. The above
amendment has removed the ambiguity and justified the position of tax-payer.

13. Non-Applicability
Erstwhile Position Amended Position
Relating to an AY in respect of which an
assessment has been done for search and
seizure operations or requisition of books of
accounts
Relating to an AY in respect of which an
assessment has been made on the basis of
search and seizure operations or requisition of
books of accounts, where disputed tax exceeds
Rs. 5 crores
Any person in respect of whom prosecution for any
offence punishable under the provisions of the
Indian Penal Code or for the purpose of
enforcement of any civil liability has been instituted
Any person in respect of whom prosecution has
been initiated by an Income-tax authority for any
offence punishable under the provisions of the
Indian Penal Code or for the purpose of
enforcement of any civil liability under any law
for the time being in force, or such person has
been convicted of any such offence consequent
to the prosecution initiated by an Income-tax
authority

14. Rules to be Prescribed
• Determination of disputed tax including the manner of set-off in respect of brought forward or carry
forward of MAT/AMT credit or set-off in respect of brought forward or carry forward of loss or
allowance of depreciation under the provisions of the Act
• Manner of calculating the amount payable under the Bill

15. Practical Issues in the Bill

16. Issuance of Certificate after 31.03.2020 however, declaration
filed on or before 31.03.2020
When the
declaration has
been filed by
appellant on or
before 31st March
2020
but the final
certificate has been
issued on or after
1st April 2020,
then declarant may
not be liable to
pay additional tax

17. Rectification filed u/s 154 but no order has been received on or
before 31.01.2020
If order is issued u/s
143 (1) and assessee
has filed a rectification
u/s 154
No rectification order
has been passed on
or before 31.01.2020
Even though assessee
intends to reduce the
litigation, he cannot
opt for the Scheme as
order has not been
passed and no appeal
is pending

18. Condonation of delay in filing appeals
An assessment order either asks for payment of demand
amount or assessee can prefer an appeal, within 30 days
If the assessee could not prefer an appeal within 30 days for
genuine reasons, after 30 days, it can file an appeal along
with condonation of delay
If the appeal as well as the condonation of delay is filed
before the cut-off date of 31.01.2020, whether that would be
eligible for the purpose of the Scheme
The above needs to be accepted and addressed
appropriately in Frequently Asked Questions (FAQs)

19. Computation of the limit of disputed tax in search cases
The limit of disputed
amount of Rs. 5
crores in search
cases shall be
computed year
wise
i.e. for each year of
block assessment
years
For instance, in a
search case where
the aggregate
disputed tax for 2 or
more years exceeds
Rs.5 crores,
a person can file
declaration for
those years in
which the disputed
tax amount does
not exceed Rs.5
crores

20. Appeal filed has the effect of reducing returned losses
Two options are provided to the tax-payer under the Bill in this regard:-
• Tax-payer can make the payment of notional tax pursuant under the Bill and carry forward
the actual returned loss or
• Pay nothing under the Bill and carry forward the reduced losses

21. Practical difficulty in acquiring the proof of withdrawal
After submission of declaration, the authorities has to grant
certificate, determining the amount, within 15 days
Tax-payer needs to pay the determined amount within 15
days
Proof of withdrawal of appeals and claims needs to be
submitted by tax-payer along with intimation of payment
It may be practically difficult to get proof of withdrawal is
appeal or petition is filed with higher authorities like High
Court or Supreme Court, considering the inherent limitation

22. Effect on other appeals on similar issues for other assessment
years
Declaration
has to be made
for all AYs if
appellant
seeks benefits
for all AYs
and does not
extend any
other AYs,
even though
similar
grounds of
appeal
will be in
connection with
the appeals
pending for a
particular AY
It is significant
to notice that
the
declaration
filed by the
taxpayer
under the Bill

23. Proof of Withdrawal
When appellant has to
submit proof of withdrawal
of appeal from High Court or
Supreme Court
Whether only application for
withdrawal shall suffice or
The appeal needs to be
actually withdrawn in
process?
The issue needs to be
addressed in FAQs

24. Refund of penalty amount
Before declaration,
full amount of tax
and specified
percentage of
penalty paid
If the said person
opts for the
Scheme in the Bill
The penalty
amount, in relation
to the disputed tax,
can be refunded as
per the amended
provision

25. Multiple issues in relation to a single appeal
There may be instances where multiple issues are part of
a single appeal
On some issues, the assessee may expect a favourable
outcome and on some others, there may be adverse
outcome anticipated
In such a scenario the assessee is not allowed to sever a
part of appeal for the Scheme proposed under the Bill
and the balance under normal appellate proceedings

26. Discretionary power for rejecting declaration
if the applicant
is ineligible
as per
Section 9
(Non-
applicability)
However, the
Authorities
may reject an
application
has no
discretionary
power to
reject anyone
from opting
under the Bill
The
Designated
Authority who
are bound by
the Bill,

27. Payment of determined amount in parts
There is no clarity as to whether declarant can pay amount determined under the Bill in
multiple parts,
even though within the given time period of 15 days

28. Cases for Protective Assessment
In case of tax-payer,
protective
assessment is
being done
Subsequently
substantive
assessment has
been completed
Whether tax-payer
needs to opt for
scheme for both
type of
assessments
The issue needs to
be addressed in
FAQs

29. Reduction in demand amount from the original amount as on
31.01.2020
The final
certificate shall
consider the
reduced amount
of ‘X-1’ and not
the amount of
‘X’ as on
31.01.2020
Before the issue
of final
certificate
The demand
amount reduces
to ’X-1’ for any
reason from the
intimation
received from
department’s
end
If the assessee
opts for the
Scheme with
the demand
amount of ‘X’ as
on 31.01.2020

30. Conclusion
The Bill is expected to be laid down in the Parliament around 1st week of March,
where it will receive assent of both the Houses, subject to modifications if any
It is expected that the department shall additionally issue FAQs to address
the concerns related to the Bill
The success of the Scheme proposed in the Bill depends on how the issues
faced by the stakeholders are addressed

31. Thank You!
Scan the QR Code to Join our
Research Group on WhatsApp
Scan the QR Code to explore more
Research from our Website
DVS Advisors LLP
India-Singapore-London-Dubai-Malaysia-Africa
www.dvsca.com
Copyrights © 2020 DVS Advisors LLP