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Direct Tax Alert: CBDT extends payment date for Vivad se Vishwas Act, 2020 to 31 March 2021

28 October 2020

With an aim to reduce tax disputes, the Direct Tax Vivad Se Vishwas Act, 2020 (‘VSV Scheme’) was introduced, followed by a notification of The Direct Tax Vivad Se Vishwas Rules, 2020. Thereafter, the Central Board of Direct Taxes (CBDT) issued Circular No. 8 of 20201 dated 22 April 2020 in FAQ format addressing some of the queries of stakeholders and providing necessary guidance on the VSV Scheme. The original deadline for filing a declaration and making payment without additional amount was 31 March 2020. Subsequently, in the wake of the COVID-19 pandemic, this deadline was extended to 30 June 2020 and thereafter it was further extended to 31 December 2020.

Please click here to read our analysis and summary of this new legislature.       

Recently, the CBDT has issued Notification2 to further extend the deadline mentioned in the VSV Scheme. We, at BDO in India, have analysed and summarised this Notification hereunder:

Due date as per:

Furnishing declaration to opt for VSV Scheme

Making payment without additional amount

a. VSV Scheme

31 March 2020

31 March 2020

b. Ordinance 20203

30 June 2020

30 June 2020

c. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020

31 December 2020

31 December 2020

d. Notification No. 85 dated 27 October 2020

31 December 2020

31 March 2021













BDO Comments:

It is pertinent to observe that while the Notification has extended the timeline for making payment without additional amount, it has not extended the deadline for filing declaration. Hence, the taxpayer who wishes to file a declaration under the VSV Scheme should furnish such declaration before 31 December 2020. The VSV Scheme provides that once the designated authority issues the certificate, the taxpayer needs to pay the amount within 15 days from the receipt of the certificate. Thus, there could be a situation where the time of 15 days could expire before 31 March 2021. In order to address this situation, the CBDT has also issued a Circular4 clarifying that where the taxpayer files a declaration under VSV Scheme on or before 31 December 2020, the designated authority, while issuing the certificate shall allow the taxpayer to make the payment without an additional amount on or before 31 March 2021.

Further, it is imperative to note that through the press release dated 27 October 2020 issued by the Finance Ministry, the CBDT has emphasised on the Principal Chief Commissioners of Income Tax (Pr CCIT) to carry out all possible actions such as disposing pending rectifications, giving pending appeal effects, removing duplicate demands, etc. so as to arrive at a final demand for each taxpayer. This notification extending the timeline is a welcome step as it provides an additional timeframe to pay tax and other dues (determined upon issuance of Form 3 by Pr CCIT under VSV Scheme) in case of taxpayers who are proposing to opt for VSV Scheme and presently may be facing challenges from a business or cash liquidity perspective. Further, such taxpayers should approach the tax authority and request to expedite their pending rectifications, order giving effect applications, etc.

1Circular No. 8 of 2020 rescinded Circular No. 7 of 2020 dated 4 March 2020

2Notification No. 85/2020/F. No. IT(A)/1/2020-TPL dated 27 October 2020. Finance Ministry has also released Press Release dated 27 October 2020 on this matter

3The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020

4Circular No. 18/2020 dated 28 October 2020