Nilanjan
In a bid to expedite the collection of pre-GST arrears without resorting to litigation, the Karnataka government has introduced the Karnataka Karasamadhana Scheme. This initiative, officially named the Karasamadhana Scheme, 2023, aims to provide significant relief to taxpayers while accelerating the recovery of overdue taxes.
What is the Karnataka Karasamadhana Scheme 2023?
The Karasamadhana Scheme, 2023, was established by the Karnataka government on July 18, 2023. The primary objective of this scheme is to efficiently recover past tax dues that date back to the pre-GST era. It does so by offering a 100% waiver on penalties and interest for taxpayers who clear their tax arrears on or before December 31, 2023.
Under this scheme, cases involving assessments, reassessments, rectifications, revisions, or appeal orders that were either completed or scheduled to be completed by October 31, 2023, and carry arrears of penalty and interest are eligible for the waiver.
Key Features of the Karnataka Karasamadhana Scheme
- 100% waiver of arrears of penalty and interest for assessments, reassessments, rectifications, revisions, and appeal orders under the KST regime completed by or scheduled to be completed by October 31, 2023.
- A similar 100% forgiveness of penalty and interest arrears for assessments, reassessments, rectifications, revisions, and appeal orders under the KVAT Act and CST Act, with certain exceptions.
- 100% waiver of arrears of interest and penalty for revision orders that have already been completed or started before the government order’s date, provided they are required to be finished by October 31, 2023, under the relevant Acts.
- Specific penalties under Sections 72 and 74(4) of the KVAT Act are subject to remission if the confessed tax due is fully paid.
How Does the Scheme Work?
To avail of the benefits of the Karnataka Karasamadhana Scheme, taxpayers must pay the remaining tax amount within fifteen days from the date of receipt of information from the Assessing Authority, Recovery Officer, or Prescribed Authority. This payment must be made either on or before January 15, 2024, whichever comes earlier.
It’s important to note that the taxpayer will only benefit from the scheme if they have no remaining arrears on the designated date. This scheme provides a significant incentive for taxpayers to clear their outstanding dues promptly and avoid prolonged legal disputes.
What is the Objective of the Karnataka Karasamadhana Scheme?
The Karnataka Karasamadhana Scheme addresses the issue of pending tax arrears and aims to expedite the collection of back taxes without the need for legal action. In today’s digital age, where most economic activities are conducted online, tax evasion has become a pressing concern.
Despite the government’s efforts to provide services online, many individuals and businesses still fail to pay their taxes and interest obligations promptly, leading to negative repercussions for India’s economy.
The Karnataka government’s initiative seeks to resolve legacy tax disputes predating the GST era, providing a quick and efficient mechanism for collecting overdue taxes while avoiding the complications of litigation.
What are the Benefits of the Karnataka Karasamadhana Scheme?
Extended application deadlines, providing an additional opportunity for those who missed the initial submission.
A chance for property dealers to recover 100% of their money.
Eligibility Criteria for Karnataka Karasamadhana Scheme
To participate in the Karnataka Karasamadhana Scheme, applicants must meet certain eligibility criteria. These criteria are designed to ensure that the scheme is available to the intended beneficiaries. Here are the key eligibility requirements:
- Exclusion of Certain Personality Types: Under section 10 A of the GST, certain personality types may not be considered eligible for the scheme. It is essential to review this section to understand who is excluded from the benefits of the Karnataka Karasamadhana Scheme.
- Payment Condition Proof: Once applicants have completed the payment, it is crucial to print off the payment condition as proof. This document serves as evidence of the payment made under the scheme.
- Required Payment Status: The applicant’s payment status is a crucial factor in determining eligibility. To qualify for the scheme, the applicant must have a payment status that meets the scheme’s requirements.
- Submission of Printed Copy: The printed copy of the payment condition, along with any other necessary documentation, must be submitted to the tax department for verification and processing.
Required Documents
To facilitate the application process for the Karnataka Karasamadhana Scheme, certain
essential documents are required. These documents help establish the applicant’s identity, financial status, and eligibility for the scheme. Here are the important documents you need:
- Applicant’s Aadhar Card: The Aadhar card serves as a primary document for establishing the applicant’s identity.
- Applicant’s PAN Card: The PAN card is essential for financial transactions and tax-related matters. It helps in verifying the applicant’s financial status.
- Business Card: For business owners or proprietors, a business card may be required to validate their association with a particular business or profession.
- Residential Certificate: A residential certificate is necessary to confirm the applicant’s place of residence, which may be relevant for tax-related considerations.
- Mobile Number: Providing a valid mobile number ensures that the tax department can contact the applicant for any further communication related to the scheme.
- Email ID: An email address is essential for electronic communication and notifications related to the Karnataka Karasamadhana Scheme.
How to Apply for Karnataka Karasamadhana Scheme?
Applying for the Karnataka Karasamadhana Scheme involves a series of steps, from application submission to the final approval of the waiver. Here is a detailed overview of the application process:
- Application Submission: Dealers, individuals, or proprietors who wish to participate in the scheme must electronically submit a separate application for each assessment year. These applications must adhere to the format prescribed by the relevant Acts. The deadline for submitting applications is December 31, 2023.
- Review and Discrepancies: The relevant Assessing Authority, Recovery Officer, or Prescribed Authority will review the applications. They will assess the amount of tax, penalty, and interest owed for each assessment year up to the filing date. If any discrepancies are identified, the applicant will be informed within 15 days of the application submission.
- Payment: In case errors or discrepancies are found, the applicant has the option to pay the remaining debt within 15 days of receiving the information. This payment must be made on or before January 15th, 2024, or whichever date comes first.
- Withdrawal of Appeals/Applications: To qualify for the waiver of penalty and interest arrears, applicants must provide a declaration confirming the withdrawal of any pending appeals or applications related to arrears of tax, penalty, or interest.
- Order of Waiver: Once the Assessing Authority, Recovery Officer, or Prescribed Authority is satisfied that the applicant meets the eligibility criteria and has complied with the scheme’s requirements, they will issue an order waiving the remaining amount of arrears of penalty and interest for each assessment year or order.
Conditions to Participate in the Program
- Payment of all back taxes on or before December 31, 2023, is required to receive a full waiver of back penalties and interest.
- A waiver of tax arrears is possible for those with only penalty and interest arrears related to assessments, reassessments, rectifications, revisions, and appeal orders completed or scheduled by October 31, 2023.
- Withdrawal of any appeals or applications filed with appellate authorities or courts in response to orders or proceedings involving arrears of tax, penalty, or interest is mandatory before benefiting from the waiver.
- After using the scheme, filing additional appeals or applications with appellate authorities or courts is not permitted.
- The program is not applicable if the State has filed appeals before the Karnataka Appellate Tribunal, the Central Sales Tax Appellate Authority, the High Court, or the Supreme Court. It also does not apply in cases where the competent authorities initiated the revision process before October 31, 2023, or when any correction is made after this date.
Special Rules of the Program
- Unregistered Dealers: The program covers assessments, reassessments, rectifications, or other processes related to unregistered dealers, provided specific requirements are met.
- Cases that have been remanded: The benefits of the program extend to assessments, reassessments, rectifications, or other proceedings resulting from cases being remanded by various appellate authorities or courts.
Conclusion
The Karnataka Karasamadhana Scheme, 2023, stands as a pragmatic solution to the problem of pending tax arrears, allowing taxpayers to settle their dues efficiently and without legal complications. By offering a 100% waiver on penalties and interest, it incentivizes timely payment and contributes to the overall economic well-being of the state.
This initiative not only addresses the challenge of tax evasion but also streamlines the process of tax collection, making it a win-win for both the government and taxpayers. With extended application deadlines and the opportunity to recover 100% of tax arrears, it is a lifeline for individuals and businesses seeking financial relief. The Karnataka government’s forward-thinking approach in introducing the Karnataka Karasamadhana Scheme sets a commendable precedent for resolving tax disputes and accelerating the recovery of overdue taxes.
