Dispute Resolution Scheme Nets Less Than Rs 75 Crore In Three Months
The government has mopped up Rs 74.50 crore till November 30 under the Direct Tax Dispute Resolution Scheme which is aimed at settling pending disputes with the Commissioner of Income Tax (Appeals), according to data accessed by BloombergQuint.
Around 3,357 cases have availed the scheme as on November 30 having tax arrears of around Rs 551 crore, the data shows. For 3,357 applications, 904 orders were passed.
Under the Direct Tax Dispute Resolution Scheme, a taxpayer whose appeal is pending as on February 29, 2016 before the CIT (Appeals) can settle his case by paying the disputed tax and interest up to the date of assessment. For a disputed tax amount of up to Rs 10 lakh, the penalty will be forgone. In cases where the disputed tax amount is over Rs 10 lakh, a penalty of 25 percent will be levied. For penalty appeals, the scheme allows the assessee to pay only 25 percent of the penalty.
The scheme which can be availed till December 31, 2016, also gives immunity against specified tax by allowing the assessee to pay only the disputed tax amount, and get immunity against paying the interest and penalty, provided he withdraws all appeals against the government in all judicial forums. A specified tax is a consequence of an amendment made with retrospective effect in the Income Tax Act or the Wealth Tax Act.
Short Of Expectations
On October 27, BloombergQuint had reported that about 2.59 lakh cases with a total tax implication of Rs 5.16 lakh crore are pending before the CIT (Appeals) as of February 29, 2016 and the Central Board of Direct Taxes (CBDT) expects around 30 percent of these assessees to avail the dispute resolution scheme.
Three months into the four-month long scheme, less than five percent of the government’s expectation of 77,000 cases have come in by the end of November.
Over a third of the total tax collected amounting to Rs 29.80 crore came from Mumbai, of which arrears were around Rs 61.48 crore. Seventy five orders were passed to collect this amount.
The details including who has availed the scheme, and the quantum of disputed tax amount is sent by various jurisdictions to the judicial wing, and is then compiled in a week’s time, an official said.
Arrears Versus Collections: Why The Gap?
There might be cases where the tax amount would have already been paid by the assessee because of which there is a significant difference between the amount of tax collected and arrears.Jayesh Sanghvi, Direct Tax Partner, EY India
Sanghvi explained that even when an appeal is pending, the Income Tax Department can ask the assessee to pay some part of the tax in advance. After paying the tax in advance, if the assessee goes for a settlement, he will only have to pay the remaining tax amount, and not the entire tax.
Riaz Thingna, Director of Grant Thornton Advisory said that once an application is filed to avail the scheme, the designated authority, which is the Commissioner of Income Tax (Appeals), has to respond within 60 days and determine the amount that is payable by the applicant. So, there might be some cases where the amount payable, including tax and penalty, is not yet determined.
There might also be cases where the amount payable is determined but has not been made by the applicant.Riaz Thingna, Director, Grant Thornton Advisory
As 904 orders were passed by November, Thinga believes that the designated authority evaluated the tax payable only for these applications, and the remaining will be done in the coming days.