All you need to know about the T.N. government’s Samadhan Scheme to settle tax dues

Tamil Nadu CM M.K. Stalin has announced the 'Samadhan Scheme' to settle arrears of tax, penalty and interest. The scheme covers 11 State Acts, with the key Acts being The Tamil Nadu Value Added Tax Act 2006 and The Central Sales Tax Act 1956. The scheme is open from Oct 16, 2023 to Feb 15, 2024. Eligible taxpayers can file their declarations online and avail benefits like waiver of up to 80% of the arrears. There are five categories under the scheme, with the amount of penalty and interest to be paid varying based on the total arrears.

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.

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 Some of the Acts include the repealed Tamil Nadu General Sales Act, 1959, the repealed Tamil Nadu Sales Tax (Surcharge) Act, 1971, the repealed Tamil Nadu Tax on Luxuries Act, 1981, among others.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.

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.

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.

If the declaration is not accepted, there is an option to file an appeal with the Additional Commissioner under the scheme.

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.