The story so far
In the recently-concluded assembly session, Tamil Nadu Chief Minister M. K. Stalin announced the ‘Samadhan Scheme’ for the settlement of arrears of tax, penalty or interest pertaining to various taxes administered under Commercial Taxes. The State government has commercial tax dues of ₹25,000 crore owed to it, with a lot of these cases pending. Advocate G. Natarajan of G.N. Law Associates helped explain the salient features of the scheme.
What are the aspects covered under the scheme?
The Tamil Nadu Taxes - Settlement of Arrears Act 2023 has now been enacted. Tax arrears relating to a total of 11 State Acts are covered under the scheme. Some of the Acts include the repealed Tamil Nadu General Sales Act, 1959, the repealed Tamil Nadu Sales Tax (Surcharge) Act, 1971, the repealed Tamil Nadu Tax on Luxuries Act, 1981, among others. The key Acts among them are The Tamil Nadu Value Added Tax Act 2006 and The Central Sales Tax Act 1956.
What is the eligibility criteria of the scheme?
The assessment year for the tax should be up to 2017-18, and the assessment order should have been passed on or before March 31, 2021. Assessment orders passed after March 31, 2021 are not eligible under the scheme.
What is the duration of the scheme and how can an eligible tax payer opt for it?
The scheme is open from October 16, 2023 to February 15, 2024. Eligible dealers and commercial establishments can file their declarations online at the Tamil Nadu Commercial Taxes Department website, https://ctd.tn.gov.in/home. After verifying the declaration, an official from the Department will issue a settlement certificate. Another key aspect is that the portal has a ‘raise query’ option where a taxpayer can raise doubts about the scheme and get them clarified before filing the declaration. If the declaration is verified and if the taxpayer has paid the amount, the balance tax liability, penalty and interest need not be paid, and the liability gets completely discharged.
What happens if the declaration is not accepted?
If the declaration is not accepted, there is an option to file an appeal with the Additional Commissioner under the scheme.
What is the amount payable under the scheme and the relief available?
There are five categories under the scheme. If the arrears (including tax, interest and penalty) are up to ₹50,000, then the amount is completely waived off, and no declaration needs to be filed.
If the arrears are more than ₹50,000 and up to ₹10 lakh, the dealers have two options. They can pay 20% of the amount and 80% would be waived off. Under the t second option, the arrears in the assessment order can be split into two: the admitted tax (what the dealer accepts) and what is not accepted (disputed tax). On the admitted tax, 66% has to be paid and on the disputed tax 33% has to be paid, as per the scheme. Also, 10% of the penalty amount and 10% of the interest mentioned in the assessment order needs to be paid.
The third category is where the arrears are more than ₹10 lakh and up to ₹1 crore. Here, the option is to pay 66% of the admitted tax and 33% of the disputed tax. Also 10% each of the penalty and interest amount as per the assessment order needs to be paid.
The fourth category, is where the arrears are above ₹1 crore and up to ₹10 crore. Here, 75% of the admitted tax has to be paid and 50% of the disputed tax has to be paid. In addition 15% of the penalty amount and 20% of the interest has to be paid.
In the last category, if the arrears amount is more than ₹10 crore, 90% of the admitted tax has to be paid and 60% of the disputed tax has to be paid. In addition, 15% of the penalty and 30% of the interest has to be paid.
What are the other points to keep in mind?
There may be orders where there is no tax demand but only interest and penalty. Such cases are also eligible under the scheme, and a prescribed percentage of the penalty and interest has to be paid based on the total amount of penalty and interest involved.
