INSUBCONTINENT EXCLUSIVE:
MUMBAI: The government is considering a litigation settlement scheme in the upcoming budget that will allow companies to put an end to
legacy tax disputes by paying a portion of the money demanded by the revenue department, said four people with knowledge of the matter.
This
could help bridge the fiscal deficit gap and monetise a part of the amount stuck in tax litigation, they said.
An estimated 500,000 cases
have been pending in the courts and quasi-judicial forums for years and it could take a long while before the tax department sees any of the
money, assuming it eventually wins
The total value of these disputes is pegged at Rs 7-8 lakh crore, said the people.
A government task force had recommended the litigation
settlement scheme in July last year
Such a move will also help improve ease of doing business
Separately, the Central Board of Direct Taxes (CBDT) had set up a panel to help reduce tax litigation in February last year focused on
the lines of the Sabka Vishwas--Legacy Dispute Resolution Scheme, which is aimed at reducing old service tax and central excise cases, said
the persons cited above.
The Sabka Vikas scheme could collect about Rs 30,000 crore
companies could settle the disputes by paying, say 10-20% of the tax demand
along with interest and penalties levied on that, EThas learnt
Or it could ask them to pay 40-50% of the tax demanded
Mehra, partner and leader, tax and regulatory, PwC India
involved, it yet could have a potential of netting in good revenues for the government, while at the same time reducing the cost and effort
full-year target, as per the Controller General of Accounts.
This comes as revenue collections have been below expectation
To be sure, goods and services tax (GST) collections were at Rs 1.03 lakh crore in December but the annual figure could still fall short of
Direct tax collections were estimated at Rs 5.5 lakh crore by the end of September last year, 16% short of the internal target.
Experts said
the Sabka Vikas scheme had worked unlike previous ones that failed to attract companies because they offered few options
