Summary: The Direct Tax Vivad Se Vishwas Scheme, 2024, announced in the Union Budget 2024-25 and effective from October 1, 2024, aims to resolve pending tax disputes by allowing taxpayers to settle their cases at reduced amounts. Applicable to appeals, writs, and other disputes pending as of July 22, 2024, the scheme excludes cases involving foreign income, assets, or specific offenses under various laws. Taxpayers must file a declaration in Form-1 with an undertaking to refrain from further legal actions on the matter. The designated authority processes declarations, issuing Form-2 certificates within 15 days. Payment is required within 15 days of receiving the certificate, followed by a final Form-4 order confirming the settlement. The payable amount varies depending on the nature and timeline of the dispute, with older cases requiring higher payments. Appeals filed by tax authorities in higher courts are eligible for a 50% reduced amount. The scheme prohibits reopening settled disputes and mandates adherence to its conditions, with violations rendering declarations invalid. Cases must be income tax-related and pending as of the specified date to qualify. Taxpayers can claim refunds for overpaid amounts but not interest. Designed to streamline dispute resolution and reduce litigation, the scheme is governed by Sections 88-99 of the Finance Act, 2024, and relevant CBDT notifications.
Page Contents
- About Direct Tax Vivad Se Vishwas Scheme, 2024
- Eligible Cases to be Settled under Direct Tax Vivad Se Vishwas Scheme, 2024
- Procedure for Opting Direct Tax Vivad Se Vishwas Scheme, 2024
- Benefits under Direct Tax Vivad Se Vishwas Scheme, 2024
- Ineligible Cases under Direct Tax Vivad Se Vishwas Scheme, 2024
- Other Important Points Related to Direct Tax Vivad Se Vishwas Scheme, 2024
About Direct Tax Vivad Se Vishwas Scheme, 2024
The Direct tax Vivad se Vishwas Scheme, 2024 has been notified by CBDT in pursuance of the announcement made in the Union Budget 2024-25 by Finance Minister Smt. Nirmala Sitharaman. It is also known as Direct tax VSVS 2024. The said scheme benefits the taxpayer as well as Indian Government by resolving tax disputes and litigations pending as on the specified date, i.e., 22.07.2024. The said scheme come into force with effect from 1.10.2024.It provides for the settlement of tax disputes in lesser amounts as compared to actual demand so raised.
For precise reference one may refer to Sec.88 to 99 of Finance (No. 2) Act, 2024, Circular no. 12/2024 and notification no. 104/204 in G.S.R. 584(E) dated 20.09.2024.
Eligible Cases to be Settled under Direct Tax Vivad Se Vishwas Scheme, 2024
1. The appeal or writ petition or special leave petition (either filed by tax payer or income tax authority or by both before an appellate forum) pending as on 07.2024.
2. The cases where objections has been raised before Dispute Resolution Panel (DRP) but no issuance of any direction till 07.2024.
3. The cases where direction has been issued by the Dispute Resolution Panel (DRP) but the final order has not been issued by the Assessing Officer till 07.2024.
4. Revision applications (filed u/s 264 of IT Act, 1961) pending as on 07.2024
Procedure for Opting Direct Tax Vivad Se Vishwas Scheme, 2024
Step 1: The taxpayer for opting the said scheme needs to file the declaration along with undertaking in Form -1.
Note: Undertaking so submitted shall be the proof by the taxpayer of not taking any further legal action in relation to disputed matter.
Step 2: The designated authority will issue certificate in Form-2 after processing the declaration.
Note: The authority shall issue the certificate within 15 days from receipt of declaration.
Step 3: After receipt of Form -2, the taxpayer shall need to make the payment within 15 days as per the instructions provided therein.
Step 4: The taxpayer shall intimate the designated authority regarding payment made by him in Form-3 along with proof of withdrawal of pending appeals.
Note: (i) Any pending appeal before CIT / ITAT shall deemed to have been withdrawn from the date of issuance of certificate.
(ii) Any pending appeal before High Court and Supreme Court shall be withdrawn by the taxpayer and proof of such withdrawal shall be submitted along with Form-3.
Step 5: The designated authority will issue a final order in Form-4 confirming the payment made by the taxpayer and closure of tax arrears disputes.
Benefits under Direct Tax Vivad Se Vishwas Scheme, 2024
The benefits can be availed by the taxpayer under this scheme on the basis of how old the appeal so filed is.
A. If the Appeal was Filed on or Before 31.01.2020 by the Taxpayer (Old Appellant Case)
| S.no. | Nature of tax arrears | Amount payable as per scheme | |
| If declaration is filed upto 31.12.2024 | If declaration is filed on or after 01.01.2025 | ||
| 1. | Where the tax arrears is aggregate of disputed tax , interest and penalty | Disputed tax and 10 % of such disputed tax | Disputed tax and 20 % of such disputed tax |
| 2. | Where the tax arrears either relates to disputed interest or disputed penalty or disputed fee | 30% of such disputed amount | 35% of such disputed amount |
B. If the appeal was filed after 31.01.2020 by the taxpayer (New Appellant Case)
| S.no. | Nature of tax arrears | Amount payable as per scheme | |
| If declaration is filed upto 31.12.2024 | If declaration is filed on or after 01.01.2025 | ||
| 1. | Where the tax arrears is aggregate of disputed tax , interest and penalty | Only the amount of disputed tax | Disputed tax and 10 % of such disputed tax |
| 2. | Where the tax arrears either relates to disputed interest or disputed penalty or disputed fee | 25% of such disputed amount | 30% of such disputed amount |
C. Where the Appeal, Petition, or Special Leave Petition is Filed by Income Tax Authority
If the appeal or petition or special leave petition is filed by the income tax authority in High Court or Supreme Court then the amount payable shall be half of the amount so calculated as per the above table.
Ineligible Cases under Direct Tax Vivad Se Vishwas Scheme, 2024
Following cases or persons considered to be ineligible as the same has been debarred under Vivad se Vishwas Scheme 2024.
A. CASES
♦ The cases where tax arrears are related to any undisclosed foreign income or assets.
♦ If prosecution is already initiated against the taxpayer.
♦ The cases where arrears pertains to assessment completed in pursuance of action u/s 132 of Income Tax Act.
♦ Tax arrears are related to assessment or reassessment based on the information received under an agreement from another country.
B. PERSONS
♦ The person who has been detained under The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 on or before filing the declaration.
♦ The person who has been either prosecuted or convicted before filing of declaration under the following Acts-
(i) Unlawful Activities (Prevention) Act, 1967
(ii) Narcotic Drugs and Psychotropic Substances Act,1985
(iii) Benami Property Transaction Act,1988
(iv) Prevention of Corruption Act, 1988
(v) Prevention of Money Laundering Act,2002
♦ If a person has been prosecuted or convicted under Bharatiya Nyaya Sanhita, 2023 by the income tax authority before filing of declaration.
♦ Person who has been notified under Special Court (Trial of offences relating to transactions in Securities Act, 1992) before filing of declaration.
Other Important Points Related to Direct Tax Vivad Se Vishwas Scheme, 2024
1. The declaration should be submitted before the authority not below the rank of CIT.
2. Matters covered under VSVS can’t be reopened again.
3. It is important to note that for opting of this scheme, the pendency of an appeal must exist. If an appeal is disposed off or the taxpayer has not filed the appeal but the time to file an appeal by the taxpayer exists on 22.7.2024 and thereafter, then such cases are not eligible to be settled under this scheme.
4. If any appeal pending as on the specified date, i.e on 7.2024 but on or before filing of declaration the appeal gets disposed off then the person cannot opt the said scheme as the appeal is no longer pending.
5. Only the disputes related to income tax are covered under this scheme.
6. One should take care of the fact that a declaration shall be considered to be invalid or deemed to not have been made if–
> any information provided by the taxpayer is founds to be false or
> if he violated any of the prescribed conditions of scheme or
> acts in the manner which is not in accordance with the undertaking given by him and in such cases the consequences against the taxpayer shall deemed to have been reviewed under Income Tax Act.
7. Any amount paid in pursuance of declaration shall not be refundable.
8. Where the declarant had paid any amount before opting for this scheme which exceeds the amount that could have been paid under Vivad se Vishwas Scheme, he shall be entitled to claim refund of such amount.
Note: However the taxpayer cannot claim interest on such refund amount.
9. Disputed tax means income tax including surcharge and cess.
Note : (If the disputed tax is related to unabsorbed depreciation or reduction in loss then the taxpayer shall have an option of including such unabsorbed amount or unallowed loss in the disputed tax or to carry forward).
10. If the taxpayer opts the said scheme then the authorities shall have to hold the respective tax matter until the settlement of such tax matter under this scheme.
11. The benefits of said scheme shall only be for those cases or tax matters which have been declared under Form -1.
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Author: Nandini Tamboli | Article assistant | HKG & Co., Chartered Accountants
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