The Direct Tax Dispute Resolution Scheme 2016

the-direct-tax-dispute-resolution-scheme-2016
The Direct Tax Dispute Resolution Scheme 2016

The Direct Tax Dispute Resolution Scheme 2016

Chapter X of Finance Act 2016

 

Purpose:Settle pending appeals/ disputes faster and economical for assessees

Act means Income Tax Act or Wealth Tax Act

Eligible Person:Any assessee/declarant making a declaration u/s 203 of the Finance Act 2016, to a notified officer not below the rank of CIT.

Amount Payable:

Situation Value Tax and interest payable Penalty payable
Pending appeal related to tax arrears Disputed tax does not exceed Rs 10 lakhs Disputed tax+ Interest till date of assessment 25% of minimum penalty on total income finally determined
Any other case Disputed tax+ Interest till date of assessment + 25% of minimum penalty 25% of minimum penalty on total income finally determined
Specified tax Any amount Amount of tax so determined

 

Note:

Disputed tax means the tax determined under the Act which is disputed by the assesse / declarant.

Specified taxmeans a tax:

  • the determination of which is in consequence of or validated by an amendment made to the Act with retrospective effect and relates to a period prior to the date of amendment and
  • a dispute in respect of such tax is pending on 29th February 2016.

Tax arrears means the amount of interest, tax or penalty determined under the Act in respect of which an appeal is pending with CIT(Appeals).

Time limit:Such declaration shall be filed at any time between 1st of June 2016 till 31st of December 2016.

Consequences of filing:

Nature Situation Consequence
Tax arrears Appeal is pending with CIT (Appeals) Such appeal is deemed to be withdrawn
 

 

 

 

Specified tax

–          Appeal is pending with CIT (Appeals), Tribunal, High Court or Supreme Court

 

–          Writ petition is filed with High Court or Supreme Court

With draw such appeal / writ and submit proof of such withdrawal
Initiated arbitration/conciliation proceedings under any law or DTAA Withdraw such claim/proceedings and furnish proof of such withdrawal
Further, an undertaking shall be furnished by the declarant waiving his right to pursue any remedy or claim available under any statute, agreement or in equity- Sec 203(4)

 

Caveats:

Under the following circumstances, it shall be presumed that no declaration has been made under this Scheme and consequently all proceedings / appeals shall stand revived:

  • Where any material particular furnished is found to be false or
  • There is a violation of the conditions specified in this Scheme
  • Declarant fails to act in accordance with Sec 203(4)

 

Process of determination of final tax:

  • Within 60 days of receipt of the declaration, the designated authority shall grant a certificate setting forth the details of specified tax/tax arrears and the final sum payable.
  • The declarant shall pay such sum within 30 days from the date of receipt and furnish proof of such payment

Consequences of the order

  • The order passed under this scheme shall be final and

 

  • No matter covered under this order shall be reopened in any proceeding under the Act or under any other law in force or under any agreement or treaty signed by India.

 

Immunity:

The designated authority, shall, subject to the provisions of the Scheme grant:

  • Immunity from instituting any proceedings for an offence under the Act
  • Immunity from imposition or waiver of any penalty under the Act in respect of :
    • Specified tax
    • Tax arrears to the extent of excess penalty
  • waiver of interest under the Act in respect of :
    • Specified tax
    • Tax arrears to the extent of excess interest

Note: The benefit of immunity shall be restricted to incomes/wealth covered under the declaration made under this Scheme

No refund:

Any amount paid under the Scheme shall not be refunded under any circumstances

Non Applicability of the Scheme:

The provisions of this Scheme shall not apply:

  • In respect of specified tax or tax arrears:
    • to search assessments under the Act (Sec 153A or 153 C or Sec 37A/37B)
    • to survey assessments under the Act (Sec 133A or 38A)
    • Where prosecution proceedings have been instituted before the filing of the declaration
    • to an undisclosed income or asset source located outside India
    • to assessment or reassessment proceedings consequent information received under DTAA or TIEA (Sec 90/90A) if it pertains to tax arrears

 

  • to any person in respect of whom an order of detention has been made under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 subject to the conditions specified under the Scheme

 

  • to any person in respect of whom prosecution for any offence punishable under the provisions of the:

 

  • Indian Penal Code, the Unlawful Activities (Prevention) Act, 1967,
  • Narcotic Drugs and Psychotropic Substances Act, 1985,
  • Prevention of Corruption Act, 1988 or
  • for the purpose of enforcement of any civil liability has been instituted on or before the filing of the declaration or
  • such person has been convicted of any such offence punishable under any of the above Acts
  • to any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992

 

Powers of the Central Government:

  • To issue directions:
    • Issue such directions or orders for proper administration of the Scheme
    • No order shall be issued to dispose a particular case in a particular manner
    • Pass such general or special order in public interest setting forth such directions or instructions as may be deemed fit
  • To remove difficulties:
    • If any difficulty arises in giving effect to the provisions of this Scheme, the Central Government may, by order, not inconsistent with the provisions of this Scheme, remove the difficulty. However no such order shall be made after the expiry of a period of two years from the date on which the provisions of this Scheme come into force

 

  • To make rules:
    • The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Scheme

Any order or rule made under the above sections shall, as soon as may be after it is made, be laid before each House of Parliament.

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