Direct Tax Vivad Se Vishwas Scheme 2024

The Vivad Se Vishwas Scheme 2024, part of Budget 2024, is an extension of the original scheme aimed at resolving pending disputes related to direct taxes. In the past few years, the number of pending disputes has increased significantly, reasons for which can be slow functioning of the faceless appeal centre as well as re-opening of multiple old matters resulting in several disputes.

The government aims to reduce tax burden on the taxpayers, arising from pendency of disputes. We believe this is a step in the right direction. On the back of the success1 of the earlier Vivad Se Vishwas Scheme of 2020 (Rs 75,000 cr revenue being garnered and about a lakh taxpayer availing the scheme) and to resolve pending income tax disputes, the government has proposed to introduce the Vivad se Vishwas Scheme 2024 (VsVs Scheme 2.0).

Which appeals are covered under the Scheme?

The Scheme has proposed to cover appeals pending before the following authorities:

  •  Hon'ble (SC).

  •  Hon'ble High Court (HC).

  •  Hon'ble Income Tax Appellant Tribunal (ITAT).

  •  Commissioner of Income-Tax (Appeals) (CIT(A)).

  •  Dispute Resolution Panel (DRP)

This would also include matters pending in write petitions, appeals for TDS / TCS defaults, penalty, etc., where no order is passed as on 22 July 2024.

Cases not covered under the Scheme.

• Search and seizure,
•         Prosecution,
•          undisclosed income/asset located overseas,
• Proceedings under Conservation of Foreign Exchange and Prevention of smuggling Activities Act, Unlawful Activities (Prevention) Act,
• Narcotic Drugs and Psychotropic Substances Act,
• Prohibition of Benami Property Transactions Act
• Prevention of Corruption Act,
•           Prevention of Money- Laundering Act, etc.

What is the amount of disputed tax payable under the Scheme?

• If the tax payable under VsVs 2.0 is less than the amount already paid during litigation, the excess will be refunded (without any interest).
• In cases where the dispute relates to the reduction of MAT/AMT credit or loss/depreciation, an option will be available to include the amount of tax related to such tax credit/loss/depreciation in the disputed taxes or carry forward the reduced MAT/AMT credit or loss/depreciation.

Types of Forms and Timelines:

What are the various Forms specified in the Scheme?

Four separate Forms have been notified for the purposes of the said Scheme. These arc as under:

Form-1: Form for filing declaration and undertaking by the declarant.
Form-2: Form for Certificate to be issued by Designated Authority.
Form-3: Form for lntimation of payment by the declarant.
Form-4: Order for Full and Final Settlement of tax arrears by Designated Authority.

• The Scheme also provides that Form-1 shall be filed separately for each dispute, provided that where appellant and the income-tax authority, both have filed an appeal in respect of the same order, single Form-1 shall be filed in such a case.
• The intimation of payment is to be made in Form-3 and is to be furnished to the Designated Authority alongwith proof of withdrawal of appeal, objection, application, write petition, special leave petition or claim.

What are the various timelines specified in the Scheme?

Various timelines specified in the Scheme are as follows:

(i) Declaration and Undertaking shall be filed by the taxpayer in Form-1 on or before 31.12.2024 to keep the amount payable on the lower threshold. In case of filing the declaration and undertaking beyond 31.12.2024, the amount payable will increase as specified in rates Table-I above.

(ii) The Designated Authority shall issue Form-2 within a period of fifteen days from the date of receipt of the declaration to determine the amount payable by the taxpayer.

(iii) The taxpayer shall pay the amount as determined in Form-2 within a period of fifteen days from the date of receipt of the certificate and shall intimate the details of such payment.

(iv) Upon receipt of Form-3, the Designated Authority shall pass an order in Form-A stating that the taxpayer has paid the full and final amount.

Other salient features

• Immunity from initiation of any proceedings in respect of an offence and imposition of penalty or interest regarding tax arrears is provided for matters opted under VsVs 2.0.
• Declaration made under VsVs 2.0 will not be considered as a precedent for the taxpayer or the tax authority in relation to the issues covered under the declaration.

For more details, Watch these video