Vivad se Vishwas I – Relief to MSMEs

About Vivad se Vishwas Scheme:

• The scheme was announced in the Union Budget 2023-24 
• The scheme is modelled on a similar 'Sabka Vishwas Scheme' for indirect taxes announced in 2019.
• The scheme provides for settlement of disputed tax, interest, penalty etc. and grant immunity from any proceeding for prosecution for any offence under the Income-tax Act in respect of matters covered in the declaration.
• Under the scheme, Ministries have been asked to refund performance security, bid security and liquidated damages forfeited/ deducted during the COVID-19 pandemic. Certain relief has also been provided to MSMEs debarred for default in execution of contracts during the COVID-19 period.
• The Ministry of Finance, through this scheme, decided to give following additional benefits to eligible MSMEs, affected during the COVID-19 period:
  • 95% of the performance security forfeited shall be refunded.
  • 95% of the Bid security shall be refunded.
  • 95% of the Liquidated Damages (LD) deducted shall be refunded.
  • 95% of the Risk Purchase amount realized shall be refunded.
  • In case any firm has been debarred only due to default in execution of such contracts, such debarment shall also be revoked, by issuing an appropriate order by the procuring entity.
    • However, in case a firm has been ignored for placement of any contract due to debarment in the interim period (i.e. date of debarment and the date of revocation under this order), no claim shall be entertained.
    • No interest shall be paid on such refunded amount. 

 

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Q1) What is another name for liquidated damages?

Liquidated damages, also referred to as liquidated and ascertained damages (LADs), are damages whose amount the parties designate during the formation of a contract for the injured party to collect as compensation upon a specific breach

Source: Government launches Vivad se Vishwas scheme for relief to MSMEs for COVID-19 period, as announced in the Union Budget 2023-24