The Union government is likely to initiate the settlement of cases initiated by the National Pharmaceutical Pricing Authority (NPPA) for pharma companies under the Vivad se Vishwas scheme 2. This is the government’s attempt at tax resolution and reducing litigation.
Sources told that the government may initiate the scheme to settle penalty cases against pharma companies. The scheme was first announced by the Finance Minister during the Budget, and is aimed at reducing litigation in the tax domain.
It is noteworthy that the National Pharmaceutical Pricing Authority (NPPA) had initiated penalty cases against some pharmaceutical companies for prescribing higher medicine prices, despite these being under the essential category and there being a price cap thus, these cases were hanging in for quite a long time.
The penalty settlement under the Vivad Se Vishwas scheme 2 would provide a way for these companies to resolve the issue and move forward.
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The government could collect between Rs 5,000 crore to Rs 6,000 crore from the settlement of penalty cases against pharma companies.
This is a positive development for the industry. The move is expected to provide much-needed relief to the companies, and at the same time, help the government reduce litigation in the tax domain.
Such type of tax amnesty Schemes are for a short duration for the specified taxes or legal proceedings, where the eligible taxpayers have to pay the prescribed amount of liability in exchange for proper disclosure. Forgiveness of tax liability includes interests and penalties and forego of any legal proceedings.
Let’s see when the government is going to announce Vivad se Vishwas Scheme 2 and how much this scheme can give benefit to pharma sector.