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Tax disputes scheme seeks to recover Rs 520 billion

The Indian government has launched a scheme for the recovery of Rs 520 billion locked up in tax disputes.

The Kar Vivad Scheme is intended to benefit over half-a-million tax-payers who are involved in tax dispute in various fora.

The scheme applicable from September 1, 1998, aims to settle amicably direct and indirect tax disputes. It was unveiled by Central Board for Direct Taxes chairman Ravi Kant and Central Board for Excise and Customs chairman S D Mohile.

Coming close on the heels of the Voluntary Disclosure of Income Scheme, the scheme targets taxpayers who are involved in long standing litigation with the various wings of the department of revenue.

Kant said the scheme offers incentives by way of payment of outstanding tax arrears at reduced rates, waiver of interest and penalty and immunity from prosecution. On his part, the taxpayer will withdraw appeals pending before the various appellate authorities and courts.

Elaborating on the features of the scheme in respect of indirect taxes, Mohile said in case of tax arrears comprising fine, penalty or interest and not duties or cess, the taxpayer shall pay 50 per cent of such fine, penalty or interest. The scheme shall also be applicable to credit of duty (modified value added tax), drawback of duty and any amount representing duty.

For both direct and indirect taxes, the scheme excludes those cases where no appeal is pending. It also excludes cases where there has been prosecution or conviction for concealment. Any person against whom prosecution has been instituted under various acts, trial of offences relating to transaction in Securities Act or Chapter Nine or 17 of the Indian Penal Code will also not be able to avail of the scheme.

Kant said the scheme is a real one-time opportunity for those Tax-payers who are entangled in long drawn litigation at various appellate and judicial stages.

The government has notified the forms for making declarations under the scheme. Form 1A has been prescribed for declaration under direct taxes while Form 1B is for indirect taxes. Form 2A will be issued by the designated authority to specify the amount payable by the declarant towards full and final settlement of the arrears.

Kant said no target has been laid for the amount that will be mopped up from the scheme.

On the question of appointing an advertising agency for carrying out a campaign for the scheme, Kant said the issue was under examination. He said it was not an amnesty scheme as such as it is aimed at getting substantial benefit to the government.

Kant said tax collection for April to July was very encouraging. He said about half-a-million companies come under the purview of the scheme. The scheme aims at taking unpaid tax arrears and is intended to be consumer friendly.

The scheme basically remains operative for a limited period of four months and shall apply to declarations filed on or after September 1, 1998 but not later than December 31, 1998.

The Samadhan Scheme is a special offer announced by Finance Minister Yashwant Sinha as part of 1998 Budget proposals to settle certain categories of disputes involving arrears of taxes.

UNI

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