Direct Tax Vivad se Vishwas Scheme 2024 – CBDT notifies Forms and Rules – Important

CBDT has notified the forms and rules for the Direct Tax Vivad se Vishwas Scheme (DTVSV 2.0) which will be effective from 1^st October, 2024. This has come in pursuance of the announcement made by the Hon’ble Finance Minister Smt. Nirmala Sitharaman in the Union Budget 2024-25 to resolve the bulk of the pending appeals for various income tax disputes.

The DTVSV Scheme offers reduced settlement amounts for ‘new appellants’ compared to ‘old appellants.’ Additionally, it provides lower settlement amounts for taxpayers who submit their declaration on or before December 31, 2024, as opposed to those who file after that date.

Applicability of Vivad Se Vishwas Scheme 2024

The Direct Tax Vivad se Vishwas Scheme 2024 is applicable on any disputes or appeals, including writs and special leave petitions (Appeals), submitted by taxpayers or tax authorities, still pending as of 22^nd July, 2024 before the following bodies:

• The Supreme Court, High Court, Income Tax Appellate Tribunal, or Commissioner/Joint Commissioner (Appeals)
• The Dispute Resolution Panel (DRP), or cases where the DRP has issued directions but the final assessment order is yet to be passed
• Revision petitions under review by the Commissioner of Income Tax.

Amount payable to opt for the Vivad se Vishwas Scheme 2024 –

If the appeal is filed after 31/01/2020:

For tax arrears including: (i) Disputed tax, (ii) Interest charged or chargeable, and (iii) Penalty levied or leviable.	Amount due before or on 31.12.2024: The amount of the disputed tax. Amount due from 1.01.2025 to the final date: The amount of the disputed tax plus an additional 10%.
For tax arrears concerning: (i) Disputed interest, (ii) Disputed penalty, or (iii) Disputed fee.	Amount due before or on 31.12.2024: 25% of the disputed amount. Amount due from 1.01.2025 to the final date: 30% of the disputed amount.

If the appeal is filed before 31/01/2020:

For tax arrears including: (i) Disputed tax, (ii) Interest charged or chargeable, and (iii) Penalty levied or leviable.	Amount due before or on 31.12.2024: The amount of the disputed tax plus an additional 10%. Amount due from 1.01.2025 to the final date: The amount of the disputed tax plus an additional 20%.
For tax arrears concerning: (i) Disputed interest, (ii) Disputed penalty, or (iii) Disputed fee.	Amount due before or on 31.12.2024: 30% of the disputed amount. Amount due from 1.01.2025 to the final date: 35% of the disputed amount.

If the appeal or writ petition is initiated by the Income Tax Department rather than the taxpayer, the taxpayer is required to pay only 50% of the amounts outlined in the table.

Additionally, if the appellant files an appeal before the Commissioner (Appeals) or Joint Commissioner (Appeals), or raises objections with the Dispute Resolution Panel on an issue where they have already obtained a favorable ruling from the Income Tax Appellate Tribunal (ITAT) or the High Court (and the ruling has not been overturned by a higher court), the amount payable will be reduced to 50% of the amount calculated as per the table.

Similarly, if an appeal is brought before the ITAT on an issue where the appellant has previously received a favorable ruling from the High Court (and it has not been reversed by the Supreme Court), the amount payable will also be reduced to 50% of the amount specified in the table.

CBDT has notified Forms for DTVSV Scheme 2024

On 20^th September, 2024, CBDT has notified the following 4 forms for opting for the Direct Tax Vivad se Vishwas Scheme 2024:-

• Form – 1 – A declaration and undertaking to be filed by the applicant, separately for each dispute. The contents of this form include general details and information about tax payable. The applicant has to provide an undertaking to voluntarily waive all rights, whether direct or indirect, to seek or pursue any remedy or claim in relation to the tax arrear.
• Form – 2- Form for certificate to be issued by the Designated Authority including details of tax arrears and amount payable by the applicant for the full and final settlement of the said tax arrear.
• Form – 3 – Form for intimation of payment by the declarant that includes details of payments such as BSR code of the bank, date of deposit, serial number of challan and the amount deposited. The form also includes proof of withdrawal of any appeal, objection, writ, application, special leave petition or claim.
• Form – 4 – Final Order issued by the Designated Authority for the full and final settlement of tax arrears by the Designated Authority including details of the tax dispute, nature and amount of tax arrear.

The declarant must submit Forms 1 and 3 electronically. These forms will be accessible on the Income Tax Department’s e-filing portal at www.incometax.gov.in.

Procedure to be followed

The declaration must be submitted in the prescribed form, providing details of the tax arrears, including disputed tax, interest, penalty, or fees.

After the declaration is submitted, any ongoing appeals or petitions before tax authorities will be treated as withdrawn. If writ petitions or special leave petitions have been filed in higher courts, the declarant must withdraw these after receiving approval under the scheme. Following the submission of the declaration, the designated authority will assess the amount payable within 15 days and issue a certificate containing the relevant details. The declarant is then required to make the payment within 15 days of receiving the certificate and notify the designated authority. All connected cases will be closed, with no further action taken on those matters.

Cases where Vivad se Vishwas Scheme 2024 is not applicable

In the following cases, the Direct Tax Vivad se Vishwas Scheme 2024 will not be applicable:-

• Search and seizure cases
• In cases where assessment or reassessment is conducted following a search, this scheme differs from the VSV 2020, which permitted applications for search-related cases with disputed tax up to ₹5 crores. Under the current scheme, such search cases are entirely excluded from eligibility.
• Any cases outside the purview of Income Tax Act, 1961, for example, GST cases, benami property transactions, money laundering
• Cases of undisclosed foreign income or assets
• Taxpayers under specific legal restrictions or serious offences.

Benefits of the DTVSV 2024 Scheme

• The pending litigation issues will be resolved
• It offers settlements without penalties or interest
• Assessees can get relief from pending demands
• No prosecution will be initiated for cases resolved under this scheme
• Taxpayers can resolve their disputes efficiently within a time frame.