/ CBDT

Overview on Vivad Se Vishwas (VSV) Scheme 2.0 rules

Vivad Se Vishwas Scheme 2024Overview on Vivad Se Vishwas (VSV) Scheme 2.0 rules

Vivad Se Vishwas (VSV) Scheme 2.0 rules, now officially notified, focus on reducing direct tax litigation, building on the success of the original VSV 1.0 from 2020.  This new scheme presents an opportunity for taxpayers to settle disputes efficiently, although it excludes more complex cases like search and foreign asset-related issues.

The scheme provides a clear and time-bound mechanism for taxpayers to settle their tax disputes by paying a determined amount. The immunity from penalties, interest, and prosecution offers significant relief, but taxpayers must ensure compliance with deadlines and procedures, as no additional concessions beyond what is specified will be provided. Additionally, once a dispute is settled, it cannot be reopened, ensuring finality. Here’s a detailed breakdown of the key points you shared:

  • Commencement Date: The new Direct Tax Vivad Se Vishwas Scheme 2024 comes into force on 1st October 2024, under the Finance (No. 2) Act, 2024. The Income Tax Department has officially notified the Vivad Se Vishwas  Scheme 2.0, aimed at resolving income tax disputes, effective October 1, 2024. This scheme offers taxpayers the opportunity to settle pending appeals with more favorable terms if declarations are filed earlier.
  • Taxpayers are encouraged to submit their declarations early to take advantage of lower settlement amounts, avoiding higher payments after the December 31, 2024 deadline. The scheme is expected to reduce litigation, offering a structured and less costly process for resolving tax disputes.
  • The scheme applies to appeals, writ petitions, and special leave petitions pending as of July 22, 2024.  It also covers disputes with objections pending before the Dispute Resolution Panel where no final assessment order has been issued. Pending revision applications before the Commissioner are also eligible for settlement under the scheme. VSV 2.0 provides taxpayers with a simplified mechanism to file appeals across various appellate forums, including:
    • Joint Commissioner of Income-tax (Appeals)
    • Income Tax Appellate Tribunal (ITAT)
    • High Courts and Supreme Court
  • Objective: The scheme aims to reduce litigation by providing taxpayers with a cost-effective mechanism to settle disputes, particularly in light of increasing pending appeals, especially at the Commissioner of Income Tax (Appeals) level. The primary objective is to provide a cost-effective settlement mechanism that reduces the litigation burden on both taxpayers and the judicial system, easing the backlog of income tax disputes.
  • Key Benefits of Direct Tax Vivad Se Vishwas Scheme 2024:

No penalties or interest will be charged on the settlement amount, and prosecution will not be initiated for settled cases. Excluded from the scheme are disputes related to search cases, prosecution cases, or those involving undisclosed foreign income or assets.

  • Lesser Settlement Amounts for Early Declarations:
    • Taxpayers who file their declarations on or before December 31, 2024, will benefit from lower settlement amounts compared to those who file afterward.
    • The scheme differentiates between a ‘new appellant’ (a taxpayer filing an appeal for the first time) and an ‘old appellant’ (those with ongoing appeals), offering lesser settlement amounts for new appellants.
  • Scheme Start Date and Rules:
    • The Direct Tax Vivad Se Vishwas Scheme 2024 comes into effect on October 1, 2024, as announced by Finance Minister Nirmala Sitharaman in her budget speech.
    • The Central Board of Direct Taxes has issued the rules and forms necessary for implementing the scheme.
  • Coverage of Appeals:
    • The scheme applies to appeals, writ petitions, and special leave petitions pending before the Supreme Court, High Courts, India’s Income Tax Appellate Tribunal, Commissioner (Appeals), and the Joint Commissioner (Appeals) as of the cut-off date.
    • It also covers cases with objections pending before the Dispute Resolution Panel if no final assessment has been issued, as well as revision applications pending with the Commissioner.
  • Higher Payable Amount for Pre-VSV 1.0 Cases: Disputes arising from cases filed on or before 31st January 2020 (the VSV 1.0 cut-off date) will attract a higher payment under VSV 2.0. Taxpayers settling disputes under VSV 2.0 will benefit from the waiver of penalties and interest. Additionally, no prosecution will be initiated for disputes settled through the scheme. Exclusions: Certain cases are not eligible for VSV 2.0, including:
    • Search cases : Exclusion of Search Cases in VSV 2.0: While VSV 1.0 allowed search cases involving disputed tax of less than Rs 5 Cr to settle (if the period to file appeals had not lapsed), VSV 2.0 excludes all such search cases.
    • Prosecutions
    • Disputes involving undisclosed foreign income or assets
  • Taxpayers facing specific legal restrictions or those involved in serious offenses
  • Forms for Filing: Forms for Filing: The scheme requires taxpayers to use the following forms:
    • Form-1: Taxpayers submit their declaration and undertaking. For filing the declaration and undertaking by the taxpayer (declarant).
    • Form-2: Issued by the Designated Authority, this confirms the acceptance of the declaration. The Certificate issued by the Designated Authority after accepting the declaration.
    • Form-3: Taxpayer notifies the authority once the payment is made.
    • Form-4: Final order from the Designated Authority, marking the dispute’s settlement.

For each dispute, a separate Form-1 must be filed.

  • Amount Payable by Declarant (Section 90):

The amount payable under the scheme depends on the nature of the tax arrear (e.g., tax, interest, or penalty) and the timing of the declaration. Early declarations will benefit from lower settlement amounts compared to late submissions, with the aim of incentivizing quick resolution.

  • Filing of Declaration and Particulars (Section 91):
    • The declarant must file a declaration in the prescribed format to the designated authority. Once the certificate under Section 92 is issued, any pending appeals or objections in appellate forums (e.g., India’s Income Tax Appellate Tribunal, Commissioner of Income Tax (Appeals) will be deemed withdrawn. The declarant must withdraw any other related appeals or petitions and submit an undertaking to forgo any future claims or legal remedies regarding the tax arrear under dispute.
  • Time and Manner of Payment (Section 92):
    • The designated authority will determine the amount payable within 15 days of receiving the declaration. A certificate will be issued detailing the tax arrear and the amount payable by the declarant. The declarant must make the payment within 15 days of receiving the certificate and submit proof of payment. Once the payment is made, the order from the designated authority will be conclusive and cannot be reopened under the Income-tax Act or any other law.
  • Immunity from Penalty, Interest, and Prosecution (Section 93):

Once the declarant complies with the payment requirements, the designated authority will not initiate any penalty, interest, or prosecution proceedings related to the tax arrear.

  • No Refunds Allowed (Section 94):
    • Any amount paid under the declaration is non-refundable. However, if the declarant has paid an amount in excess of what was required under the scheme, the excess amount will be refunded, though no interest will be provided on such refunds.
  • No Benefit, Concession, or Immunity (Section 95):
    • Other than the specific benefits or immunities provided in Section 92(3) or Section 93, no further benefit, concession, or immunity will be granted to the declarant concerning any other proceedings.

FAQs on provisions of the Direct Tax Vivad Se Vishwas (DTVSV) Scheme 2024

Direct Tax Vivad Se Vishwas

CBDT issues Guidance Note 1/2024 in the form of frequently asked questions (FAQs) on provisions of the Direct Tax Vivad Se Vishwas (DTVSV) Scheme , 2024. Circular No. 12 of 2024 issued on 15.10.2024. This note is designed to provide clarity and assist taxpayers in better understanding the provisions of the (DTVSV) Scheme, 2024. The Circular is available at:
incometaxindia.gov.in/communications…

**********************************************************

If this article has helped you in any way, i would appreciate if you could share/like it or leave a comment. Thank you for visiting my blog.

Legal Disclaimer:
The information / articles & any relies to the comments on this blog are provided purely for informational and educational purposes only & are purely based on my understanding / knowledge. They do noy constitute legal advice or legal opinions. The information / articles and any replies to the comments are intended but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as a legal advice or an indication of future results. Therefore, i can not take any responsibility for the results or consequences of any attempt to use or adopt any of the information presented on this blog. You are advised not to act or rely on any information / articles contained without first seeking the advice of a practicing professional.