The Vivad Se Vishwas Scheme 2024, proposed in the Finance (No. 2) Bill 2024, is a landmark initiative aimed at resolving tax disputes and reducing litigation under the Income-tax Act, 1961. This scheme seeks to provide a simple and efficient mechanism for taxpayers to settle their disputes with the tax authorities by offering attractive terms for the payment of tax arrears. Below is a detailed breakdown of the key provisions and implications of the scheme.
Objective and Scope
The primary objective of the Vivad Se Vishwas Scheme 2024 is to reduce the volume of pending tax disputes and provide an opportunity for taxpayers to resolve their litigation by paying a portion of the disputed tax, interest, and penalties. The scheme aims to provide immediate relief to taxpayers and enhance the efficiency of tax administration.
Key Definitions
1. Appellant:
- Appeal or Petition Pending: Any person whose appeal, writ petition, or special leave petition has been filed either by the individual or by the income-tax authority, or by both, and is pending
before an appellate forum as of the specified date (22nd July 2024).
- Objections Before the Dispute Resolution Panel (DRP): A person who has filed objections before the DRP under section 144C of the Income-tax Act, 1961, and the DRP has not issued any direction on or before the specified date.
- DRP Directions Issued but Assessment Incomplete: A person in whose case the DRP has issued directions under sub-section (5) of section 144C of the Income-tax Act, 1961, and the Assessing Officer has not completed the assessment under sub-section (13) of that section on or before the specified date.
- Pending Revision Applications: A person who has filed an application for revision under section 264 of the Income-tax Act, 1961, and such application is pending as of the specified date.
2. Declarant: A person who files a declaration under section 91 of the scheme.
3. Designated Authority: An officer not below the rank of a Commissioner of Income-tax, notified for the purposes of the scheme.
4. Disputed Tax: The term “disputed tax” under the Vivad Se Vishwas Scheme 2024 refers to the income-tax, including surcharge and cess, payable by the appellant for an assessment year or financial year. The computation of the disputed tax varies based on the status of the legal proceedings as of the specified date (22nd July 2024):
- Pending Appeals or Petitions: If an appeal, writ petition, or special leave petition is pending before an appellate forum, the disputed tax is the amount payable if the case were decided against the appellant.
- Objections Before the Dispute Resolution Panel (DRP): If objections are pending before the DRP under section 144C of the Income-tax Act, the disputed tax is the amount payable if the DRP were to confirm the variations proposed in the draft order.
- DRP Directions Issued but Assessment Incomplete: If the DRP has issued directions under sub-section (5) of section 144C and the assessment is not completed under sub-section (13) of that section, the disputed tax is the amount payable as per the assessment order to be passed.
- Pending Revision Applications: If an application for revision under section 264 is pending, the disputed tax is the amount payable if the revision application were not accepted.
Additionally, if the dispute relates to the reduction of tax credit under section 115JAA or section 115JD, or any loss or depreciation, the appellant has the option to either:
- Include the tax amount related to such tax credit or loss/depreciation in the disputed tax, or
- Carry forward the reduced tax credit or loss/depreciation as prescribed.
5. Disputed Interest: The interest determined under the Income-tax Act where:
- The interest is not charged or chargeable on disputed tax.
- An appeal has been filed by the appellant concerning such interest.
6. Disputed Penalty: The penalty determined under the Income-tax Act where:
- The penalty is not levied or leviable in respect of disputed income or disputed tax.
- An appeal has been filed by the appellant concerning such penalty.
7. Disputed Fee: The fee determined under the provisions of the Income-tax Act in respect of which an appeal has been filed by the appellant.
8. Disputed Income: In relation to an assessment year means the whole or so much of the total income as is relatable to the disputed tax.
9. Tax Arrear: 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
- Disputed fee.
Procedure for Availing the Scheme
1. Filing of Declaration and Payments of Amounts:
- The declaration referred to in section 90 (The Finance Act (NO. 2) Bill, 2024) shall be filed by the declarant before the designated authority in such form and verified in such manner as may be prescribed.
- The designated authority shall, within a period of fifteen days from the date of receipt of the declaration, by order determine the amount payable by the declarant in accordance with the provisions of this Scheme and grant a certificate to the declarant containing particulars of the tax arrear and the amount payable after such determination in such form as may be prescribed.
- The declarant shall pay the amount determined under sub-section (1) within a period of fifteen days of the date of receipt of the certificate and intimate the details of such payment to the designated authority in the prescribed form. Thereupon, the designated authority shall pass an order stating that the declarant has paid the amount.
2. Effect on Appeals:
- Upon filing the declaration, any appeal pending before the Income Tax Appellate Tribunal, Commissioner (Appeals), or Joint Commissioner (Appeals) in respect of the disputed income or disputed interest or disputed penalty or disputed fee and tax arrear shall be deemed to have been withdrawn from the date on which the certificate under sub-section (1) of section 92 (The Finance Act (NO. 2) Bill, 2024) is issued by the designated authority.
- Where the declarant has filed any appeal before the appellate forum or any writ petition before the High Court or the Supreme Court against any order in respect of tax arrear, he shall withdraw such appeal or writ petition with the leave of the Court wherever required after the issuance of the certificate under sub-section (1) of section 92 and furnish proof of such withdrawal along with the intimation of payment to the designated authority under sub- section (2) of that section.
Amount Payable Under the sub section (2) of that section.
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