What is the Income Tax e-Dispute Resolution Scheme, what is the process to avail its benefits?

The Central Board of Direct Taxes (CBDT) introduced the e-dispute resolution scheme on August 30. Earlier, the Income Tax Department had notified this scheme in 2022. Its aim is to resolve tax-related dispute issues quickly.

Mayank Mohanka, founder of TaxAaram.com, said the e-dispute resolution scheme was notified in 2022. Now the CBDT has started the facility of electronic filing of online applications. Now the application can be filed through the prescribed Form 34BC through the e-filing portal of Income Tax.

Who can file the application?

Taxpayers whose income as per their income tax return ( ITR ) is up to Rs 50 lakh and the aggregate amount of variation is less than Rs 10 lakh can file an application under this scheme. Mohanka said, “Any person including salaried taxpayers who fulfils the prescribed criteria can file an application under this scheme. For example, salaried taxpayers whose income (as per ITR) is up to Rs 50 lakh and who have received an assessment order containing disallowances up to Rs 10 lakh in respect of HRA claim or section 80C claim can settle their tax matters under this scheme. This will save them from penalty under section 270A in case of under-reporting or mis-reporting of income.”

What are the conditions to avail this scheme?

There are some other conditions as well. For example, the taxpayer should not be facing any detention order under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. However, this restriction will not apply if such order has been quashed by the court. Apart from this, if the taxpayer has been convicted under the Unlawful Activities (Prevention) Act, 1967, Narcotics Drugs and Psychotropic Substances Act, 1985, Prohibition of Benami Transactions Act, 1988, Prevention of Corruption Act, 1988 (49 of 1988) and Prevention of Money Laundering Act, 2002, then he cannot file an application under this scheme.

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How will taxpayers benefit from this scheme?

Mohanka said that under this scheme, the principal of income tax and its interest has to be paid. However, the penalty imposed on the taxpayers can be reduced or waived off. The Dispute Resolution Committee will decide on this. This is a kind of amnesty scheme on the lines of ‘Vivaad se Vishwas’. However, there is no deadline for filing the application. This scheme is different in that the penalty can be reduced or waived off, but the interest demand sent to the taxpayers cannot be waived off.

What is the process for filing an application?

The Income Tax Department has issued an FAQ (Frequently Asked Question) in this regard. According to this, taxpayers will have to go to e-DRC (Dispute Resolution Committee). This committee has the right to reduce the penalty of waiving the punishment after the payment of tax. Its purpose is to resolve disputed issues quickly. The taxpayer can access the e-DRS module by logging in to the tax portal of the Income Tax Department. After logging in, he will have to select e-file on the dashboard. After that, he will have to go to Income Tax Forms. Then File Income Tax Forms will have to be selected.

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