News › Weekly Alert Article
Delhi Government introduces new Amnesty Scheme
The Government of Delhi has joined the growing list of Governments, at the Central as well as State level, by announcing an Amnesty Scheme for State tax dues. The aim is to incentivise taxpayers to voluntarily declare and pay unassessed tax dues as well as settle assessed tax dues. Taxand India discovers the benefits and safeguards of the new Amnesty Scheme.
- The Scheme offers immunity from re-opening proceedings in respect of taxes declared as well as immunity from prosecution and payment of penalty and interest (ie, over and above the assessed/ quantified interest paid under the scheme). The immunity from penalty and prosecution proceedings extends to all offences covered under the respective Acts such as non-registration, non-furnishing of returns in time etc
- From a works contract TDS perspective, the Scheme offers immunity to the deductor as well as deductee if either of them opts under the Scheme
- The Scheme further promises confidentiality including an assurance that disclosures made under the Scheme shall not be shared with any person, Government department/ agency
- No refund of the tax paid under the Scheme shall be available, and in cases where a declarant fails to pay a part of the tax dues, the same shall be recoverable along with interest, under the provisions of the DVAT Act
- Where the Commissioner believes or is satisfied that a declaration made is false in material particulars, he may serve a show cause notice on the declarant, within a period of 1 year from the date of declaration, seeking to recover the dues unpaid or short paid under the Scheme, in respect of the period beginning from 1 April 2009
- Further, where a declaration is found to be substantially false, the Commissioner shall, within 3 months of issuance of show cause notice, make an assessment of the tax due. Credit of taxes paid under the Scheme shall be given in such assessment
Also published in Thomson Reuters' Taxnet Pro, 3 October 2013
Amnesty schemes can be broadly categorised as schemes that seek to garner tax payments and schemes that seek to settle disputes. This Scheme appears to be a combination of the two and thereby offers a comprehensive solution to undeclared dues, assessed dues as well as dues pending at various stages of litigation.
Most amnesty schemes have failed to evoke the desired response either on account of being restrictive in their applicability or on account of trade’s apprehensions of repercussions under other allied tax laws. What sets this Scheme apart from many of its predecessors is the fact that it recognises and attempts to address this apprehension by assuring confidentiality of the information submitted in the declaration.
One key aspect that the Scheme has failed to address is whether VAT dues can be paid using credit and whether credit of the VAT paid under the Scheme shall be eligible to be passed on/ availed. That apart, the Scheme appears to offer a viable option for a taxpayer to disclose past period dues as well as settle past period litigation without payment of ongoing interest, penalty and without prosecution.