The scheme has been extended by a month till January 31.
In a massive clean up of legacy issues, nearly one-fifth of about 5 lakh entities locked in tax litigation with the government have opted for a dispute redressal scheme, helping settle around Rs 83,000 crore of contested amount, a top finance ministry official said on Sunday.
Finance Minister Nirmala Sitharaman had in her Budget for fiscal starting April 2020 announced a Vivad se Vishwas (VsV) Scheme to settle pending disputes relating to direct taxes. It was an attempt to release Rs 9.32 lakh crore blocked in approximately 4.8 lakh appeals pending at various appellate forums.
"Out of the pending cases, 96,000 have opted for the scheme to settle about Rs 83,000 crore (of disputed tax)," Finance Secretary Ajay Bhushan Pandey told PTI in an interview.
Considering the surge in VsV application that got filed in December 2020 and demands of taxpayers, he said the government has extended the scheme by a month till January 31.
The entities opting for the scheme have to pay requisite tax and litigations are closed and penal proceedings dropped.
"Under this exercise, more than Rs 1 lakh crore tax demands, which arose because of incorrect entries, have been cleaned up," he said.
The litigation and appeal cases are before the Commissioner (Appeals) and tax tribunals to higher courts and in arbitration.
Once an entity opts for the VsV scheme and pays the due tax, the cases are deemed to have been withdrawn from the forums, interest, penalty and prosecution are also withdrawn.
"We have extended the date till January 31. So, we hope to achieve a much higher figure. So that substantial number of cases which are pending will get settled under Vivad Se Vishwas scheme," the Secretary said, adding a large proportion of entities opting to settle disputes is from the private sector.
The scheme provides for settlement of disputed tax, disputed interests, disputed penalty or disputed fees in relation to an assessment or reassessment order on payment of 100 per cent of the disputed tax and 25 per cent of the disputed penalty or interest or fee.