New Delhi : The Central Board of Direct Taxes (CBDT) has issued a set of guidelines on the interplay between two major schemes to reduce litigation – Vivad Se Vishwas Direct Tax Dispute Settlement Scheme and Mutual Settlement Process (MAP) which provides relief. are multinational companies.
The set of guidelines clarifies how tax authorities and businesses should approach disputes under these various schemes.
MAP is a method used by the tax authorities of multinational companies to resolve tax disputes on cross-border transactions in their respective countries.
Vivad se Vishwas scheme for direct tax disputes allows taxpayers to pay only the principal tax amount and enjoy exemption of interest and penalty. The scheme, launched in 2020, covers direct tax matters relating to property tax, securities transaction tax, commodity transaction tax and tax on online advertisements imposed by the Income Tax Department.
The latest guidance from CBDT is an update to an earlier one issued in 2020.
Experts said the latest guidance pertains to two aspects- the interplay between MAP and Vivad Se Vishwas scheme and the applicant’s responsibility to make correct and complete disclosures.
The CBDT explained that in cases where a resident taxpayer had settled a tax dispute on cross-border transactions under the Vivad se Vishwas scheme and his associate company in another country, the tax authority in that country has sought settlement under MAP. CBDT to be informed. In addition, the MAP Vivad se Vishwas will not deviate from the outcome of the scheme.
Further, it also provides that where a non-resident taxpayer has opted for the Vivad se Vishwas scheme, access to MAP will not be available to such non-resident taxpayer, Saurav Sood, Practicing Leader (International Taxes) at accounting and consulting firm SW India explained.
“On the flip side of true and full disclosure, CBDT has urged taxpayers to expedite disclosure of material changes in the information or documentation submitted while applying for MAP. Providing access to all documents in good faith will help in smooth and efficient conduct of the MAP process,” Sood said.
Chirag Nangia, partner, Nangia & Co. LLP, said taxpayers should not expect to get a different outcome under MAP in cases where there exists an overlap with the earlier settlement under the Dispute Se Vishwas scheme or the decision of the Income Tax Appellate Tribunal. .
“The press release also urged the taxpayers to make ‘true and complete’ disclosure of all factual information and attendant particulars based on the cardinal principle of ‘good faith action’ along with updated developments on pending cases to the Competent Authority of India.” ,” said Nangia.