All About Tax Dispute Settlement Scheme (Vivad se Vishwas Bill)

Subodh Kumawat

1 year ago

The Union Finance Minister Nirmala Sitharaman has proposed the Vivad Se Vishwas Scheme 2024 for settling disputes of income tax pending appeal. The Direct Tax Vivad se Viswas Scheme 2024 (VSV 2.0) is starting from 1st October for taxpayers who need to resolve their pending direct tax disputes. Read Notification

The Finance Minister suggested that the monetary limit for filing of appeals to Tribunals, High Courts, and Supreme Courts by the tax authorities concerning direct tax, excise, and service tax has been increased to Rs. 60 Lakhs, Rs. 2 crores, and Rs. 5 Crores respectively.

Vivad Se Vishwas Scheme 2024 has been proposed by the Union Finance Minister Nirmala Sitharaman for setting income tax disputes pending appeal.

Latest Update

The new Guidance No. 02/2024 relates to issues and comments on the DTVSV Scheme. Read the PDF for details
The DGIT(S)/e-Filing Notification/Form 1/DTVSVS/2024 is related to submitting a form-1 online on the e-Filing portal. Read Also

Income Tax Authorities Contacting Assessees for Vivad Se Vishwas Scheme

All over the country, the disputes between the IT council and individuals as well as corporations need to be solved by the Income-Tax (I-T) officials through the Centre’s flagship Vivad Se Vishwas Scheme (VSVS) before the end of the month. To avail of the scheme the officials are alerting the individuals and corporations by calling, giving emails, and sending letters to settle the direct tax disputes with the council. “Reaching out to key litigants and our counterparts where we are in litigation is the key strategy for us so that they can pay up 50 per cent and withdraw”.

Who can be a Part of the Tax Dispute Settlement Scheme?

According to the Vivad se Vishwas bill, this scheme will apply to taxpayers who have filed appeals for resolving disputed tax, interest or penalty matters with the Income-tax Appellate Tribunal, the Commissioner (Appeals), High Court or Supreme Court. It doesn’t matter whether the tax demand is such cases are pending or have been paid.

Benefits of the Vivad Se Vishwas Scheme

Vivad Se Vishwas Scheme 2024 benefit can be claimed by taxpayers in matters where appeals/writ petition/special leave petition (SLP) connecting to disputed tax, interest, penalty or fee is pending before the appellate authorities/High Court/Supreme Court.

The scheme advantage will be extended to the matters on the filed objections to the Dispute Resolution Panel and the DRP is yet to issue directions. In the matters where DRP has issued directions, but, till now the tax council has not passed an assessment order under such directions.

Even in the cases where a revision application has been filed via the taxpayer to the commissioner the Vivad Se Vishwas Scheme 2024 can be opted for by the taxpayers.

In cases where the assessment was performed based on a search, assessment year in respect of which prosecution has been instituted on or before the date of filing of declaration, undisclosed income from a source located outside India, there is no applicability of Vivad Se Vishwas Scheme 2024.

Scheme advantage shall not be available to any person concerning whom prosecution for any offense punishable under the provisions of the Unlawful Activities (Prevention) Act, 1967, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Prohibition of Benami Property Transactions Act, 1988, the Prevention of Corruption Act, 1988, the Prevention of Money- Laundering Act, 2002, has been instituted on or before the filing of the declaration or person has been convicted.

In Case The Dispute is Related to Interest or Penalty Amount

On or before December 31, 2024, if the scheme has been claimed in respect of the appeal filed for the period before January 31, 2020, only the disputed tax including 10% of the disputed tax would be liable to get paid, but when the scheme has been claimed on or after January 1, 2025, the taxpayer is required to pay 20% of disputed tax in addition to the Disputed tax.

On or before December 31, 2024, if the scheme has been claimed concerning the appeal filed for the duration post-January 31, 2020 but on or before July 22, 2024, solely the 25% of disputed interest or penalty would be liable to get paid, however, if the scheme is claimed on or after January 1, 2025, then the taxpayer is required to pay 30% of disputed interest or penalty.

If the scheme has been taken on or before December 31, 2024, in consideration of the appeal filed for the period on or before January 31, 2020, but on or before July 22, 2024, only the 30% of disputed interest or penalty will liable be paid, however, if the scheme is claimed on or after January 1, 2025, the taxpayer is required to pay 35% of disputed interest or penalty.

On or before December 31, 2024, if the scheme has been claimed concerning the appeal filed for the duration between January 31, 2020, to July 22, 2024, only the disputed tax would need to be paid, however, if the scheme is claimed on or after January 1, 2025, the taxpayer is liable to pay 10% of disputed tax in addition to the Disputed tax.

Significantly, the settlement amount subjected to get paid to be lessened to 50% in two cases. First, where an appeal/ writ/ Special Leave Petition is filed by the tax department. Second, where the issue is covered by a favourable decision of ITAT/ High Court in the taxpayer’s case.

How the Tax Dispute Settlement Scheme (Vivad se Vishwas) Will Work

As per the bill related to the scheme, the designated authority will declare the total amount payable by the declarant or taxpayer within 15 days, starting from the date of receiving receipt of the declaration under this Act. This declared tax amount payable by the taxpayer will be decided by the authority based on provisions of this Act (the scheme). The designated authority will also provide a certificate to the declarant, which will highlight the information amount of ta arrears and total payment amount after such determination.

The taxpayers should also pay the required amount identified by the designated authority within 15 days, starting from receiving the receipt of the certificate, which contains details about such payment to be paid to the designated authority in a prescribed form.

The (Vivad se Vishwas) scheme also highlights the point that once the taxpayers decide to resolve the dispute with the tax authority under this scheme, then the amount payable would be considered final and such cases will not be opened again for proceeding under the Income Tax Act.

The designated authority would not be entitled to impose, apply or levy any penalty or interest under the Income Tax Act concerning tax arrears in this scheme.

Who Cannot be a Part of the Tax Dispute Scheme (Vivad se Vishwas)?

The tax dispute settlement scheme (Vivad se Vishwas) will not be applicable for taxpayers in tax arrears-related disputes as given below:

The scheme will not be applicable for an assessment year where the assessment has been made under section 153A or section 153C of the IT Act if it is related to any tax arrear.
For an assessment year where the prosecution has been instituted on or before the date of filing of declaration.
Any disclosed income from a foreign source outside India or any undisclosed assets outside India.
For an assessment or reassessment that has been made as per the agreement highlighted in section 90 or section 90A of the Income-tax Act.
The scheme will not be applicable in cases where the appeal before the Commissioner regarding the notice of enhancement has been made under section 251 of the Income Tax Act.
The scheme will also not apply to any individual against whom an order of detention has been passed under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 on or before the filing of the declaration.

Withdrawal of Appeal Deemed

In case the designated authorities issue a certificate under Section 5(1) under the IT Act, the appeal pending with the ITAT or the CIT (A) would be deemed as automatically withdrawn.

Withdrawal of Writ

The declarant must file an application regarding the withdrawal of the writ of petition to the High Court or the Supreme Court if the petition is pending with the court regarding tax dues.

Withdrawal of Claim

Wherever each proceeding for arbitration, conciliation or negotiation has been begun or notice thereof has been provided in way of any law or agreement inserted into by India with any other country or territory outside India including for the security of investment, the declarant shall file an application for withdrawal of the claim.

Steps to File a Declaration under Vivad se Vishwas Bill

Steps to file a declaration under VSV schemes:

Login to the I-T portal.
Click on the Vivad Se Vishwas tab.
Prepare and Submit the DTVSV Form.
Select the year and the filing type.
Fill out Form-1 correctly.
Fill out Form-2 as a final submission.
File the required documents properly.
File them with DSC or EVC accordingly.
Make the payment within 15 days in Form-3 issued by the I-T Department.
The order for settlement will be issued by the department.

Conclusion

It is totally the choice of the taxpayer to opt or not the benefits of the scheme. He should make an informed decision. Consider the rules and requirements before going for the scheme. Conduct a cost analysis before going for or dropping the scheme. It can benefit you if you make a wise decision.