Open to tweaking Budget to address concerns of the industry, says FM

Finance ministry to come out with detailed rules on Vivad Se Vishwas Bill in a couple of days

Finance minister Nirmala Sitharaman did not rule out tweaking provisions of the Budget to address concerns of the industry.

She also said her ministry is willing to take more steps beyond the Budget announcements to boost the economy.

“As and when tweaking will have to happen in the Budget or as and when more has to be done beyond the Budget, we are willing,” she said in her interaction with sector experts on Friday.

The finance minister also said that the ministry will come out with detailed rules on its direct tax resolution scheme in a couple of days. This will provide clarity to those who are keen to settle their tax disputes under the scheme.

Changes to the Budget are made when the Finance Bill comes up for discussion which will happen after Parliament reconvenes post the recess next month.

Industry sought clarity on taxes on real estate investment trusts (REITs), infrastructure investment trusts (InvITs), dividend tax, employees stock options (ESOPs) and real estate, among others.

The amended direct tax resolution or Vivad Se Vishwas Bill is yet to be tabled in Parliament and then enacted. As such, the rules under the Bill would not be in the form of a notification, Sitharaman said.

She said the details will give a clear picture to what the notification will contain once the Bill is passed by Parliament.

“In a day or two, we will be coming out with a clear non-paper (on the scheme) because Parliament is yet to pass it,” she said.

She told consultants from Deloitte and PricewaterhouseCoopers, among others, that they will have time to look at these and tell their clients what will come out. “You will get 30 days or three weeks before the Bill is passed,” the finance minister told the consultants.

Recently, the Cabinet okayed expanding the scope of the Bill called Vivad Se Vishwas to make it more attractive. The ambit will include litigation pending in arbitration forums and debt recovery tribunals (DRTs). The scheme will also include cases related to revision and small-value search disputes.

The Cabinet also sweetened the scheme by reducing the disputed amount by half for those assessees who got favourable orders, but the income tax department challenged those.

Sitharaman has already introduced the Bill in the Lok Sabha to resolve disputed tax cases, amounting to Rs 9.3 trillion, giving effect to the Budget announcement.

The scheme offers waiver of interest, penalty, and prosecution for settling tax disputes. It was earlier limited to cases pending before the commissioner (appeals), the Income Tax Appellate Tribunal, high courts or the Supreme Court as of January 31, 2020. Now, a complete waiver of interest and penalty will be given if tax dues are paid by March 31. An additional 10 per cent of the disputed amount will have to be paid after that. To queries on employees stock option provisions in the Budget for start-ups, the finance minister said she is willing to know the opinion of the industry whether to treat ESOPs as salary or perk and how it should be taxed.

Revenue secretary A B Pandey said the Budget announced more beneficial ESOP tax regime than Silicon Valley.

On the industry demand for a review of tax on long-term capital gains in equities, revenue secretary A B Pandey said the levy was imposed two years back only and businesses themselves asked for stability of the tax regime.