Deadline for tax settlements has been extended till January 31 now

The government has given companies like Vodafone and Cairn Energy one more month to accept its offer to settle retro tax disputes and has extended its one-time tax dispute resolution scheme till January 31st.

The Direct Tax Dispute Resolution Scheme was announced by Finance Minister Arun Jaitley in the budgfor 2016-17 and it seeks not just to settle disputes in retrospective taxes, but end nearly 2.6 lakh pending tax cases where Rs 5.16 lakh crore are locked in.

The offer to settle the disputes was to end on December 31, but it has now been extended till January 31, said the Central Board of Direct Taxes (CBDT).

On May 26, the government had notified the scheme saying it would open on June 1 and close on December 31.

"In the said notification, the figures, letters and words December 31, 2016, the figures, letters and words January 31, 2017, shall be substituted," CBDT said in a notification.

The scheme provides for waiving interest and penalties if the principal amount involved in retrospective tax cases is paid.

For disputes other than the retrospective tax cases, taxpayers, whose appeal is pending as on February 29, 2016 before the CIT (Appeals), can settle cases by paying the disputed tax and interest up to the date of assessment.

For a disputed tax amount of up to Rs 10 lakh, the penalty will be forgone. In cases where the disputed tax amount is above Rs 10 lakh, a penalty of 25 per cent will be levied.

For penalty appeals, the scheme allows the assessee to pay only 25 per cent of the penalty.

Through the scheme, the government hopes to settle major retrospective tax cases facing Vodafone Group and Cairn Energy of UK. It also expects a third of the other tax disputes to be settled.

The notification comes against the backdrop of tepid response from companies to the scheme. So far, none of the companies facing the retrospective tax cases have come forward.