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CBDT Circular Guidance on Vivad Se Vishwas Scheme, 2024

CBDT Guidance on Vivad Se Vishwas Scheme, 2024 related CBDT circular

Direct Tax Vivad Se Vishwas Scheme, 2024 provides a structured approach to settle ongoing tax disputes and aims to reduce litigation by offering taxpayers a way to resolve matters amicably. The CBDT Circular No. 12/2024 outlines key guidelines, adding clarifications on various situations where the scheme applies or is restricted.

Vivad Se Vishwas Scheme 2024 offers an important opportunity for taxpayers to settle disputes efficiently, but the guidelines also clearly demarcate ineligible cases to ensure that those involving serious fraud, undisclosed foreign assets, or search cases are not covered. These restrictions maintain the integrity of the tax system while offering relief in less severe cases.

Central Board of Direct Taxes issued a Guidance Note in the form of Frequently Asked Questions to provide clarity on the Direct Tax Vivad Se Vishwas Scheme, 2024. The Frequently Asked Questions aim to address taxpayer queries and assist in understanding the scheme’s provisions, which were introduced in the Union Budget 2024-25 to resolve pending income tax disputes. You can access the circular and Frequently Asked Questions via the official Income Tax Dept portal.

Understanding the nuances of when the scheme applies and where it doesn’t can help taxpayers make informed decisions about resolving their disputes under this new provision. Here are some notable points from the circular that may have not been widely discussed previously:

Key Guidelines on the Direct Tax Vivad Se Vishwas Scheme, 2024 related CBDT circular

Direct Tax Vivad Se Vishwas Scheme, 2024

  1. Section 264 Revision Applications:

  • Income Taxpayers who have filed revision applications under Section 264 of the Income Tax Act and if the application was still pending as of 22nd July 2024, are eligible to opt for the scheme. This provision offers a relief avenue to taxpayers who had sought revisions before the cut-off date.

  1. Prosecution Restriction:

  • The scheme cannot be opted for in cases where prosecution has already been instituted prior to filing a declaration under the Direct Tax Vivad Se Vishwas Scheme. For instance, if there is an ongoing prosecution for issues like non-payment of Tax Deducted at Source, even if the tax case is under appeal, the taxpayer is not eligible to use the scheme. This ensures that taxpayers facing prosecution for serious offenses remain outside the scope of Direct Tax Vivad Se Vishwas Scheme.

  1. Undisclosed Income or Search Proceedings:

  • Taxpayers with undisclosed income or assets outside India or cases arising from search & seizure operations (u/s 132 or 132A of the Income Tax Act) are excluded from the scheme. Further, appeals related to assessments u/s 143(3), 144, 147, 153A, or 153C, which stem from search-related cases, are also ineligible. This exclusion covers taxpayers involved in serious tax evasion or those undergoing extensive scrutiny following raids.

  1. Disputed Tax Involving Both Qualifying & Non-Qualifying Arrears:

  • If the disputed tax involves both qualifying and non-qualifying tax arrears, such as foreign income disputes, the taxpayer cannot opt for the scheme for any part of the dispute. This ensures that ineligible arrears prevent partial resolution under Direct Tax Vivad Se Vishwas Scheme.

  1. Computation of Disputed Tax (Reduction in Loss/Unabsorbed Depreciation):

  • In cases where there is a reduction in loss or unabsorbed depreciation due to the dispute, the taxpayer has two options:
    • Option 1: Pay tax (including surcharge and cess) on the reduced amount and continue carrying forward losses or unabsorbed depreciation post-reduction.
    • Option 2: Adjust the carry forward of the reduced losses/unabsorbed depreciation without paying additional tax.
    • The written down value of assets for depreciation purposes will not be restored to pre-dispute levels, preventing any tax advantage from being derived from the reduction in losses or depreciation claims.
  1. The CBDT Circular No. 12/2024 outlines key forms and procedures under the Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024. These include:
    • Form 1: Declaration submission
    • Form 2: Certificate from the designated authority
    • Form 3: Payment intimation
    • Form 4: Final settlement.

This structured process enables Income taxpayers to resolve disputes efficiently, and the Circular advises timely action, with reduced payment rates available until December 31, 2024.

  1. CBDT Circular No. 12/2024 welcomes the clarifications for the Vivad Se Vishwas (VsV) Scheme, 2024, which help taxpayers identify eligible cases and understand exclusions like disputes related to the equalization levy. However, the guidance leaves out specific cases, such as those where appeals against intimations under section 143(1) were included in VsV 2020 but are now unclear under VsV 2024. It also notes that VsV 2024 does not cover disputes where appeal time limits had not expired by July 22, 2024.
  2. It clarifies the eligibility of pending appeals as of July 22, 2024, excludes search-related assessments, foreign income/assets cases, and other specific laws from the scheme, and outlines deadlines for favorable payment terms. The circular details procedural forms required for taxpayers to settle disputes efficiently, with a deadline for lower payment rates by December 31, 2024. Full details can be accessed on the Income Tax Department’s website. For further details, visit the Press Release.

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