Telangana: Commercial Taxes dept issues OTS scheme to settle legacy dues

Hyderabad: The Commercial Taxes department on Monday announced a one-time settlement (OTS) scheme to settle disputed tax under the legacy Acts such as the Andhra Pradesh General Sales Tax Act (1957), the Telangana Value Added Tax Act (2005), the Central Sales Tax Act (1956), and the Telangana Entry of the Goods into Local Areas Act (2001).

According to the state’s commissioner of commercial taxes, arrears worth Rs 3000 crores are waiting in various stages of litigation and cannot be recovered. Therefore, it has made a proposal for settlement and has requested the government for necessary orders. 

The development comes as a response to the request from the Commercial Taxes Commissioner for the introduction of one-time settlement scheme of tax arrears to realise the locked up revenue.

Similar one-time settlement schemes had been executed in Maharashtra, Karnataka, Kerala, Bihar and West Bengal in the past for realising the disputed taxes, Chief Secretary Somesh Kumar said in the order.

Provisions under the Telangana State One-Time Settlement Scheme 2022:

For settlement of disputes under this scheme, each year of assessment shall be a distinct unit. A total of 100% of undisputed tax will be payable. The following rates are applicable for disputed tax :

  • Under the Andhra Pradesh General Sales Tax, 40% of the balance tax will be collected from the dealer, while the remaining 60% of demand will be waived off
  • Under Value Added Tax & Central Sales Tax, 50% of the balance tax will be collected from the dealer and the remaining 50% of demand will be waived off
  • Entry tax on Motor Vehicle & Goods worth 60% of the balance tax will be collected from the dealer and the remaining 40% of demand will be waived off
  • For the dealers and/or people availing of the above scheme, the interest and the penalty shall be waived off. under this scheme. No refunds are given under this scheme.

The timeframe under the One Time Settlement is as follows :

Sl.  No  Particulars  Timeline 
(1)  (2)  (3)
1.  Application to avail OTS  16.05.2022 to 30.06.2022
2.  Scrutiny of application for confirming  the arrear & Intimation  1.07.2022 to 15.07.2022
3.  Submission of settlement letter by taxpayer and payment of the agreed amount  16.07.2022 to 15.08.2022

The scheme will be executed through an online module where the dealer can apply for it through an online application. In cases where the dealer is no more in business, they can apply it offline in their respective jurisdictional circle.

The application shall be scrutinized by a three-member committee consisting of AC(ST) of the circle, DC(ST), and JC(ST) of the division. The committee would then send a confirmation letter to the applicant notifying them of the status of the proposal.

On receipt of the confirmation letter, the applicant would make the payment and submit the payment details along with necessary documents along with the application for withdrawal of the appeal.

The proceedings for the settlement of balance tax, penalty, and/or interest will then be issued after the realization of the total tax payable and disposal of the case as withdrawn by the respective legal forum.  

For the amounts payable higher than Rs 25 lakhs, an installment facility is provided without interest for up to 4 equal monthly installments. Bank interest rates will be applied to those seeking more installments. 

“Notwithstanding anything contained in any provisions of the respective Acts, the appeal pending before the appellate authority or the Tribunal or the Court in respect of any order or notice shall be withdrawn fully and unconditionally by the applicant,” the Chief Secretary said in the order.