THE GIST of Editorial for UPSC Exams : 16 March 2020 (Direct Tax Vivad se Vishwas Bill 2020 (Mint))

Direct Tax Vivad se Vishwas Bill 2020 (Mint)

Mains Paper 3:Economy
Prelims level:Direct Tax Vivad se Vishwas Bill
Mains level: Provisions and impact of the bill

Context:

• The finance minister has introduced The Direct Tax Vivad se Vishwas Bill, 2020 in the Lok Sabha togive effect to the Budget announcement to resolve direct tax disputes.
• The scheme is modelled on a similar scheme (Sabka Vishwas Scheme) for indirect tax which wasannounced in last year’s Budget and the window to avail it closed on January 15 this year.
• The government said that nearly 95% of 1.9 lakh outstanding cases were resolved under SabkaVishwas Scheme, resulting in over Rs 35,000 crore of revenue for the government.

Need for the bill:

• As many as 4,83,000 direct tax worth over Rs 9 lakh crore cases are pending in various appellateforums i.e. Commissioner (Appeals), ITAT, High Court and Supreme Court.
• Tax disputes consume lots of time, energy and resources both on the part of the government as wellas taxpayers and deprives the government of timely collection of revenue. Therefore, there is anurgent need to provide for resolution of pending tax disputes.

Provisions ofthe bill:

• The bill offers waiver of interest, penalty and prosecution for settlement of disputes that are pendingbefore the commissioner (appeals), Income Tax Appellate Tribunals (ITATs), high courts or theSupreme Court as on January 31, 2020.
• The pending appeal may be against ................................................

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Cases not covered Under thescheme:

• The scheme will not apply to prosecution cases under the Indian Penal Code (IPC), thePrevention of Money Laundering Act (PMLA) and the Prohibition of Benami PropertyTransactions Act.
• Besides, the disputed tax amount should not relate to undisclosed foreign income, assets,assessment or reassessment.

Impact:

• As the Bill emphasises on trust building and provides a formula-based solution without any discrimination, it is expected that the scheme will reduce litigation expenditure for the government.
• This will not only benefit the ..........................................

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Way forward:

• The current step will not only help in clearing the huge backlog of pending cases but will also help tochange the current perception of the tax regime from indulging in tax terrorism to a tax friendly regimeand act as a confidence building measure for taxpayers, consequently leading to improved taxcompliance.

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Prelims Questions:

Q.1)With reference to the Puducherry’s Lieutenant Governor, consider the following statements:
1. The Madras High Court held that L-G could not interfere with its day-to-day functioning of the elected government.
2. The constitutional provisions, the 1963 Act as well as the Rules of Business of the Government of Puducherry lay expect the Lieutenant Governor to act as a bridge between the local government and the Centre.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: .............................................

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Mains Questions:
Q.1) The Finance Ministry has recently introduced The Direct Tax Vivad se Vishwas Bill, 2020.Highlight the provisions of the Bill along with its intended impact.