Resolve Tax Disputes With Vivad Se Vishwas Scheme 2024

CLEAR THE CLUTTER: NAVIGATE TAX DISPUTES WITH VIVAD SE VISHWAS SCHEME 2024

The Direct Tax Vivad Se Vishwas Scheme, 2024 (‘the DTVSV Scheme 2024’, or ‘the Scheme’) launched by the Government of India, aims to resolve long-standing tax disputes, facilitating the quick closure of litigation and reducing the burden on taxpayers. It has been enacted vide Chapter IV (Section 88 to 99) of Finance (No 2) Act 2024. Originally introduced in 2020, the scheme has seen updates and expansions, with 2024 bringing renewed focus and modifications to further streamline the process.

The scheme came into effect on 1st October, 2024. The corresponding Rules and Forms for implementing the Scheme were notified vide Notification No. 104/2024 in G.S.R 584(E) dated 20.09.2024.

CBDT has also issued Guidance Note through Circular No. 12/2024 date 15.10.2024 to address different case scenarios and the questions that might arise. It provides essential guidance for taxpayers to settle their disputes under the DTVSV Scheme, avoiding prolonged litigation. With clear instructions on eligibility, payment timelines, and procedural forms, the Circular simplifies the resolution process.

Objectives of Direct Tax Vivad Se Vishwas Scheme, 2024

The primary objectives of the Vivad se Vishwas Scheme 2024 are:

1. Dispute Resolution: To provide a platform for taxpayers to settle their disputes with the Income Tax Department without lengthy litigation.

2. Reduction of Litigation: To decrease the number of pending cases in courts and tribunals, thus improving the efficiency of the judicial system.

3. Encouraging Compliance: By offering incentives for settling disputes, the scheme encourages voluntary compliance among taxpayers.

4. Revenue Collection: The scheme aims to enhance revenue collection for the government by resolving disputes amicably.

Key Features of Direct Tax Vivad Se Vishwas Scheme, 2024

1. Extended Deadline: The deadline for availing the scheme has been extended to December 31, 2024. This extension aims to provide taxpayers with additional time to resolve their disputes without the fear of litigation.

2. Simplified Process: The application process has been streamlined, with online platforms allowing taxpayers to file their applications quickly and efficiently. Simplified forms and clear guidelines have been introduced to reduce bureaucratic hurdles.

3. Discounts and Waivers: Under the scheme, taxpayers can benefit from significant discounts on demands, penalties and interest. For disputes settled before a certain date, taxpayers may receive complete waivers on penalties, depending on the circumstances.

Applicability of Direct Tax Vivad Se Vishwas Scheme, 2024

Section 89 of the Scheme defines “Appellant” as who has any disputes, appeals (including writs petitions or Special leave petitions), filed by either the taxpayer or the tax authorities which are pending as on 22nd July, 2024 with either:

• An Appellate forum like the Supreme Court, High Court, ITAT, Commissioner/Joint Commissioner (Appeals)
• The Dispute Resolution Panel (DRP) or where the person has filed any objection to order of DRP but the final assessment is awaited

It also includes the person who has filed a revised application under Section 264 of the Income-tax Act, 1961 and such application is pending on the mentioned date.

Tax arrears that can be settled under Direct Tax Vivad Se Vishwas Scheme, 2024:

The following tax arrears as determined under the provisions of the IT Act could be settled under the Scheme:

• The aggregate amount of
  • Disputed tax,
  • Interest chargeable or charged on such disputed tax and
  • Penalty leviable or levied on such disputed tax; or
• Disputed Interest; or
• Disputed Penalty; or

Amounts Payable for Settlement of Tax Disputes under Direct Tax Vivad Se Vishwas Scheme 2024

To apply for settlement of the dispute the taxpayers must pay the following amounts under the Direct Tax Vivad Se Vishwas Scheme, 2024:

The amount payable will be reduced to 50% in the following scenarios:

• The appeal was filed by tax authorities
• The appeal was filed before any authority, and an order in favour of the taxpayer was received and a higher authority has not reversed such an order.

*Here, New Appellant is the person applying for the relief after the 31^st Jan 2020 but on or before 22^nd July 2024 and Old Appellant implies a person who has applied for the relief on or before 31^st January 2020.

Notified Forms under Direct Tax Vivad Se Vishwas Scheme, 2024

Further, the tax authorities have notified four forms for the purpose of Vivad Se Vishwas Scheme 2.0. They are as follows:

• 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 Intimation of payment by the declarant
• Form-4: Order for Full and Final Settlement of tax arrears by Designated Authority

Forms 1 and 3 shall be furnished electronically by the declarant. These Forms will be made available on the e-filing portal of Income Tax Department i.e. www.incometax.gov.in.

A link for filing the Form-1 has been provided under the e-Filing Portal: https://www.incometax.gov.in -> Login -> e-File -> Income Tax Forms -> File Income Tax Forms -> Select “Persons not dependent on any source of Income (Source of Income not relevant)” -> Vivad Se Vishwas Scheme, 2024 (Form 1 DTVSV 2024).

The DTVSV Scheme stipulates that Form-1 must be submitted separately for each dispute. However, if both, the Appellant and the income tax authority have filed an appeal concerning the same order, a single Form-1 should be submitted in that instance.

Procedure to apply for Vivad Se Vishwas Scheme 2.0

Step 1: An eligible person desirous of settling the arrears under the scheme must file Form-1, including all necessary details as notified by the tax authority, with the Designated Authority (a tax officer not below the rank of Chief Income Tax Officer).

Step 2: After submission, an electronic receipt acknowledging the declaration filed is generated.

Step 4: Any appeal pending before the CIT(A) or ITAT regarding the same tax arrears will be considered withdrawn effective from the date the certificate is issued by the Designated Authority. If Appellate has filed a writ petition with the High Court or Supreme Court, it will have to withdraw those appeals.

Step 5: After processing your declaration, the Designated Authority will issue a certificate in Form-2 confirming the withdrawal of appeals.

Step 6: After receiving Form-2, proceed to make the payment and complete Form-3 to furnish an intimation of the payment made along with proof of withdrawal of any pending appeals. Submit Form-3 to the Designated Authority electronically.

Step 7: The Designated Authority will issue a final order in Form-4 regarding the payment made and confirm the closure of the tax arrears dispute.

Step 8: Alongside the declaration, you will need to submit an undertaking waiving your right to seek any remedy related to the tax arrears.

The Vivad se Vishwas Scheme 2024 represents a significant step toward resolving tax disputes in India. The revised scheme and the CBDT circular have cleared several doubts of taxpayers, enabling them to take a practical call for settling disputes and thus, seek finality of outcomes of outstanding disputes in those cases. The scheme offers taxpayers an opportunity to close litigation chapters amicably. As awareness of the scheme grows, it has the potential to transform the tax landscape, encouraging compliance and fostering a more robust economy. Taxpayers are encouraged to take advantage of this opportunity before the December deadline to settle their disputes and move forward without the burden of litigation.

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 Disclaimer: Absolute Care is taken in compilation of this article however inadvertently if any errors occurs then the Author shall not be held responsible for any such cause. The Content provided is only for educational purpose and shall not be construed as rendering of any Professional Advice in any manner whatsoever. The readers must exercise their own Judgement and refer the original source before any implementation.