Introduction
In a effort to reduce the ever increasing burden to tax litigation and to present taxpayers with a smooth settlement structure for resolution, the CBDT brought into force the Direct Tax Vivad Se Vishwas Scheme, 2024 (VSV Scheme) through the Finance (No. 2) Act, 2024. A scheme based on the implementation that was successful in 2020,this is also targeted towards accelerating the resolution of litigations already pending by building trust among taxpayers as well as between the latter and the tax authorities .
This blog, brought to you by My Dream Consultant, outlines the key aspects, rules, and benefits of the scheme to help you make informed decisions regarding its applicability.
What is the Vivad Se Vishwas Scheme (VSV), 2024?
The VSV Scheme, 2024, facilitates the resolution of disputes related to direct taxes by allowing taxpayers to settle them with a minimal payment of the disputed tax amount. This scheme aims to reduce litigation and offer a cost-effective, quick resolution framework for taxpayers and tax authorities alike.
Key Highlights of the VSV Scheme, 2024
Commencement Date
The scheme allows taxpayers to file declarations for opting into the scheme starting October 1, 2024.
Disputes Covered
The scheme is applicable for disputes that were pending before any appellate forum as of July 22, 2024. These disputes include:
- Appeals, Writs, or Special Leave Petitions (SLPs) filed by taxpayers or tax authorities before appellate forums.
- Objections filed with the Dispute Resolution Panel (DRP) under Section 144C of the Income Tax Act, 1961, where:
- Directions are yet to be issued.
- Directions are issued, but assessments are not yet completed.
- Revision Applications filed under Section 264 before the Commissioner of Income Tax (CIT).
Non-Applicability of the Scheme
There are certain disputes that fall out of the preview of VSV Scheme:
- Proceedings arising out of search and seizure.
- Proceedings relating to undisclosed foreign income or assets.
- Prosecution has commenced before filing a declaration.
- Disputes involving individuals convicted under various laws, including:
- Prevention of Money Laundering Act (PMLA), 2002.
- Narcotic Drugs and Psychotropic Substances Act, 1985.
- Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974.
For a detailed list of exclusions, taxpayers should refer to Section 96 of the Finance (No. 2) Act, 2024.
Tax Arrears and Amount Payable
Depending on the nature of the dispute and the declaration,varying amounts are payable under the scheme.Taxpayers opting for the scheme before 31 December 2024 will get preferential settlement rates than others who make later applications.
Key Rates Under the Scheme
- For Disputed Tax Amounts:
- 100% of disputed tax if filed by December 31, 2024.
-
110% of disputed tax if filed between January 1, 2025, and the last date.
- For Disputed Interest, Penalty, or Fee:
- 25% of the disputed amount if filed by December 31, 2024.
- 30% of the disputed amount if filed after January 1, 2025.
Forms and Their Purposes
The scheme requires taxpayers to utilize specific forms for declarations and confirmations. Key forms include:
| Form | Purpose |
| Form 1 | Declaration for opting into the scheme. |
| Form 2 | Issuance of order determining the payable amount. |
| Form 3 |
Confirmation of tax payment and withdrawal of disputes. |
| Form 4 | Final confirmation of payment by the designated authority. |
Forms 1 and 3 are available on the Income Tax e-filing portal, while Forms 2 and 4 can be downloaded after issuance by the designated authority.
A Step-by-Step Procedure for Opting Into the VSV Scheme
- File a Declaration (Form 1): The taxpayer submits Form 1 indicating the disputed tax amount.
- Tax Payable Determination Order (Form 2): The order determining the amount payable is issued within 15 days by the designated authority.
- Payment of Disputed Amount: The taxpayer pays the specified sub as indicated in Form 2 and provides proof of having paid through Form 3.
- Final Confirmation (Form 4): Final order confirmation by the prescribed authority for payment.
Key Advantages of the VSV Scheme, 2024
- Cost Efficiency: Lower settlement amounts compared to prolonged litigation.
- Time-Saving: Quicker resolution of disputes pending for years.
- Litigation Burden Reduced: These reduce pending appeals and writ petitions.
- Simplified Compliance: Easy-to-use forms and online submission process.
Important Notes for Taxpayers
- Payments made under the scheme is non-refundable.
- Declaration made under the scheme does not accept the tax position.
- Taxpayers may get refunds if they have paid an amount more than the settlement amount, without interest.
Why Choose My Dream Consultant?
At My Dream Consultant, we specialize in offering end-to-end solutions for tax dispute resolution, including guidance on the Direct Tax Vivad Se Vishwas Scheme, 2024. Our team of experts ensures that your applications are processed efficiently, and we provide personalized consultations to help you achieve a hassle-free experience.
FAQs on the VSV Scheme
- Who can opt for the scheme?
Any taxpayer or tax authority with pending disputes as of July 22, 2024. - Is there a deadline for filing the declaration?
The last date for filing declarations under the scheme is yet to be announced. - Can I settle disputes from a search and seizure case?
No, disputes arising from search and seizure procedures are excluded.
For professional assistance and tailored solutions, reach out to My Dream Consultant, your trusted partner in simplifying tax compliance.
