Direct tax dispute resolution scheme kicks off today
June, 01st 2016
A new dispute settlement scheme will kick in on Wednesday, providing companies such as Vodafone and Cairn that have been hit by retrospective amendment to India's incometax law to tax indirect transfers an opportunity for resolution .
The Direct Tax Dispute Resolution Scheme, unveiled in this fiscal's budget , allows for settlement of cases pending in various courts, tribunals, arbitration or mediation under the Bilateral Investment Protection Agreement (BIPA).
The scheme provides an opportunity for settlement of cases emanating from retrospective amendment of tax laws, with the companies required to pay just the basic tax demand and get a waiver on interest and penalty.
In his budget speech on February 29, finance minister Arun Jaitley had said, "To give an opportunity to the past cases, which are ongoing under the retrospective amendment, I propose 'one time' scheme of dispute resolution for them in which subject to their agreeing to withdraw any pending case in any court or tribunal or any proceeding for arbitration, mediation, etc under BIPA, they can settle the case by paying only the tax arrears in which case liability of the interest and penalty shall be waived."
A finance ministry statement said the one-time tax dispute resolution scheme shall come into force on June 1 and declarations under the scheme may be made on or before December 31.
The Central Board of Direct Taxes notified the rules and forms on May 26. Besides this scheme, a 6% equalisation levy on cross-border digital transactions will come into force on Wednesday.
These rules were notified by the revenue department earlier in the month, a CBDT statement said. The levy will apply only to business-to-business transactions.