The Indian Finance Minister Mr.Arun Jaitley during the Union Budget 2016 stated that for bringing the number of taxation cases and litigation down across the country a Dispute Resolution scheme will be announced. As the litigation causes increased spending for taxpayers and for the IT Department, the institution of the new arrangement aims at reducing the administrative and compliance costs which both of the parties bears.
Dispute resolution scheme gives an excellent opportunity to the assesses to come out of infructuous litigation by paying either no or minimal penalty- subject to certain conditions
Main Features of the Scheme
The key features of the scheme are as follows:
- Taxpayers with pending cases or appeals could make payments toward the amount of tax under the dispute together with the interest accrued till assessment. Such payment which is made would settle the tax liability of the taxpayer provided he has a pending case or appeal before the IT Commissioner on such specified date.
- The amount of tax under dispute to a maximum of Rs 10 lakhs, there will be no penalties,
- If the amount of tax under dispute exceeds Rs 10 lakhs, penalty which is equal to 25 percent of the lowermost penalty amount which might be levied for taxes either direct or indirect, would be levied.
- In case the taxpayer pays 25 percent of the lowermost amount of penalty which may be levied, then he could find a settlement with respect to appeals which are pending against the order of a penalty.
Benefits under the Scheme:
With the introduction of Tax Dispute Resolution Scheme both the taxpayers and the Income Tax authorities will benefit in the following ways:
- According to the scheme, declarants could find a settlement with respect to the pending appeal or case through the payment of arrears of tax solely. Any liability with respect to the interest would be written-off and there will no levy of penalties.
- This scheme would also guarantee that several offenses which are done by the taxpayers are categorized and graded as per the penalties which they might incur. It would, in turn, relieve the department officers with their burden in decision making for the uniqueness of every individual cases or appeal.
- This scheme also offers taxpayers a portal via which they could declare their any income which they are not disclosed so far, this would benefit the individuals and also the companies in the same parlance.
- This scheme purposes for reducing the amount of disputes which is caused due to huge penalties which are levied, and further aims to remove penalty charges completely in specific cases.