Amnesty Scheme {एमनेस्‍टी योजना}

The Ministry of Corporate Affairs launched the Amnesty Scheme for the LLP- Limited Liability Partnership Companies that have not filed the mandatory legal documents such as the change in directors and annual statements. The main goal of this Scheme is to promote easy-going business and to purify the system. One-time relaxation for the payment of the extra fees and protection for prosecution will be provided as well.

Objective

The Scheme is putting forward the settlement of the direct tax disagreements related to the individual income tax and corporate tax among the taxpayers and the department of taxes. This also grants protection from prosecution, price and interest for the procedures that the taxpayers have chosen to avail this Scheme.

Outline

• If the taxpayers decide to obtain resources, then a small proportion of the whole tax with the penalty and interest will be paid which also depends on the kind of pending dispute for the whole and final settlement.
• The Scheme grants protection from prosecution, penalties and enthusiasm for the procedures for which the individual has chosen to avail this Scheme.
• Under this Scheme, the tax disputes are not allowed to be reopened in another proceeding by some designated authority or by the department of income tax.

Eligibility Criteria

Any taxpayer who has any dispute in the tax matters and the appeal is still pending in the following authorities is eligible for this Scheme

• Income-tax Commissioner
• Appellate Tribunal for the Income-Tax
• High court
• Supreme court
• DRP- Dispute Resolution Panel and cases that directions which have been issued by DRP but without any assessment order passed.
• Revised petitions are revised before the Commissioner of the Tax.

The Scheme includes cases where the other authorities passed the unfavourable order and the limited time for demanding the order with high power has not yet expired by January 31, 2020.

However, there are some guidelines under this Scheme where the taxpayer won’t be qualified to avail this Scheme. If the proceedings for the penalty has been already initiated ageist the individual before registering for the declaration or when the assessment was already made based on information provided under any treaty of tax among other countries and India. The most crucial element of this Scheme is that it is applicable for appeals filed opposed to taxpayers by the income tax authorities of India. 

Duration of Amnesty Scheme

Initially, when the Amnesty scheme was launched, the payment for the disputed tax amount was to be decided by March 31, 2020. After that, an extra 10% was planned to be paid by the dispute which was established under the Scheme after March 31 but before the closure of the Scheme.

With the on-going covid-19 calamity, the time limit for solving the disputes lacking payment of the extra amount is now extended to June 30 2020.

Key Features

• The government cleared everything out by declaring that the amount accepted for the tax position by the individual, and it won’t influence the claims made by the taxpayers in the coming years.
• There is also provision for refund of the amount of taxes if the taxpayer has paid the disputed taxes already and it is more than the required amount needed under the Scheme.
• The dispute matters which are not as per the guidelines covered by the Scheme are allowed to be reopened by the authorities in any other scheduled proceeding.

The Scheme is better for the taxpayers who want to settle their disputes in the country and save the extra cost they are spending on the litigations. The individuals can quickly solve their tax disputes by paying the penalty amount, and then they can benefit from penalty and waiver of the interest as well. The settlements under this Scheme protect from the prosecution as per tax law of India when it comes to disputes.

Except for the other cases, this Scheme will be productive for the taxpayers in the following circumstances:

• If the dispute case related to the previous years and the constant interest load is high.
• If the taxpayer has higher chances of winning the case and the higher authority has lower tax position legally.
• If the disputed amount is lower and the individual wishes to save on the possible lawsuit costs.
• If there are conflicting judicial verdicts at the tax tribunal or the high court level; and the last judgment at the Supreme court will take more time.
• If the dispute is related to a foreign taxpayer and it is possible to assert the credit for tax in their own country.
• If the foreign taxpayer has finished their business in India, but it is still stuck in disputes about tax from previous years.

So, the taxpayers must estimate the probability of choosing the Scheme for several years if there are pending disputes. Therefore, a complete cost-benefit examination must be done as per shaping the probable cost outflows for the tax payment, penalty or interest via the assistance provided under the Scheme. 

If you are in the state of Kerala, you will be able to find more details about this scheme or register/sign-in on the Kerala VAT Amnesty Portal.

Frequently Asked Questions

Q. What is Amnesty scheme?

The Ministry of Corporate Affairs launched the Amnesty Scheme for the LLP- Limited Liability Partnership Companies that have not filed the mandatory legal documents such as the change in directors and annual statements and to promote easy-going business and to purify the system.

Q. When was this Scheme launched?

The Scheme was launched on September 1, 2019.

Q. What is the objective of the Scheme?

The main objective of this Scheme is to promote easy-going business and to purify the system. One-time relaxation for the payment of the extra fees and protection for prosecution will be provided as well.

Q. What is the duration of the Scheme?

The Scheme is now extended up to June 2020 for Cobid-19 situations.

Q. How many LLPs does India have?

India has around 1.25 lakh active LLPs.

Q. Who are the applicable authorities under this Scheme?

The Income-tax Commissioner, Appellate Tribunal for the Income-Tax, High court, Supreme court and the DRP are the applicable authorities under this Scheme.

Q. Is there any provision for a refund if the taxes are more than the amount needed?

Yes, there is also provision for refund of the amount of taxes if the taxpayer has paid the disputed taxes already and it is more than the required amount needed under the Scheme.