The center is considering a one-off amnesty plan to resolve legacy tariff-related disputes following the success of Sabka Vishwas in resolving excise and service tax cases and Vivad se Vishwas in income tax issues, of which two people are aware of the matter said, seeking anonymity.
With industry demanding a way to resolve previous customs-related disputes, the government is actively considering such a solution, they added.
The government and businesses are embroiled in legacy disputes such as customs classification, disagreements over ratings and rules of origin issues, they added.
“Previous dispute settlement procedures have been very successful. They immensely helped people, especially small businesses, get rid of their previous baggage of disputes and move forward with a clear board. A similar scheme may be expected in this budget, “said one of the two officials.
In her first budget on July 5, 2019, Finance Minister Nirmala Sitharaman proposed the first mechanism to settle old disputes for the central consumption tax and service tax in order to make the tax on goods and services (GST) work more smoothly. “GST has just finished two years. One area that concerns me is that we have major litigation pending before the GST regime. More than £3.75 trillion is locked in litigation related to service tax and excise tax. It is necessary to unload this baggage and get on with business, “she said in her budget speech. Last year she proposed the Vivad se Vishwas (no dispute, but trust) to reduce litigation for the direct tax regime as well. “I hope taxpayers will take this opportunity to get rid of annoying litigation.”
Sabka Vishwas (Everyone’s Trust) Legacy Dispute Resolution Scheme (SVLDRS) was launched on September 1, 2019 with the aim of reducing litigation so taxpayers can focus on complying with the GST regime. The system made it easier to pay disputed tax amounts between 70% and 40% of the tax amount and waived interest and penalties.
SVLDRS saw approximately 190,000 taxpayer returns with tax levies of approximately £90,000 crore, said the second official. The Vivad se Vishwas program is still in operation. The deadline for taxpayers’ use is January 31, he added.
“An amnesty program modeled on Vivad se Vishwas or other similar programs (SVLDRS) might be a welcome decision, but largely depends on implementation,” said Ranjeet Mahtani, partner at Dhruva Advisors LLP.
“Towards a Faceless System, longstanding disputes are resolved to clear the strained justice pipeline and improve the law to keep pace with time, technology and international best practices. Customs law and border protection are now an economic system as well as a geopolitical instrument and must therefore keep pace with the times, “added Mahtani.
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