Jaitley said the tax department is moving towards a lower tax regime with non-litigious approach. Thus, while compliant taxpayers can expect a supportive interface with the department, tax evasion will be countered strongly. He said there are about 3 lakh tax cases pending with the first Appellate Authority with disputed amount being Rs 5.5 lakh crore.
"Litigation is a scourge for a tax friendly regime and creates an environment of distrust in addition to increasing the compliance cost of the tax payers and administrative cost for the government," Jaitley said.
A taxpayer who has an appeal pending as of today before the Commissioner (Appeals) can settle his case by paying the disputed tax and interest up to the date of assessment. "No penalty in respect of I-T cases with disputed tax up to Rs 10 lakh will be levied.
Cases with disputed tax exceeding Rs 10 lakh will be subjected to only 25 per cent of the minimum of the imposable penalty for both direct and indirect taxes," he said.
Jaitley said any pending appeal against a penalty order can also be settled by paying 25 per cent of the minimum of the imposable penalty.
However, persons charged with criminal offences under specific Acts are barred from availing this scheme.The new Dispute Resolution Scheme (DRS) is intended towards solving the long pending tax disputes with MNCs and create favourable investment climate, experts said.
"Retrospective amendments not to be made going forward and special regime to settle past disputes on indirect transfer tax, showcases Government's commitment towards creating a stable and predictable tax regime in India," said Naveen Aggarwal, Partner (Tax) KPMG in India.
Earlier this month, the tax department took the unusual step of sending a reminder notice to Vodafone for payment of Rs 14,200 crore of taxes on an issue that is under arbitration.Even after two years, the arbitration in the Vodafone case has not yet started in absence of appointment of a presiding judge on a three member arbitration panel.
The Rs 10,247-crore tax issue of Cairn Energy Plc, UK could manage to get a full panel constituted, even though the process started much later than Vodafone, only after the issue was brought to the notice of Prime Minister's Office.
