Direct Tax Dispute Resolution Scheme 2.0
1. The New Vivad se Vishwas (VSV) scheme 2024 (‘scheme’) is like a peace treaty for taxpayers which will be effective from October 01, 2024. Under the scheme, taxpayers with pending appeals or writ petitions related to Direct Taxes can resolve disputes by paying a portion of the disputed tax, interest, penalty, fee. The benefits vary depending on when the dispute is settled.
2. One important question is how much exactly does a taxpayer need to pay to settle the dispute?
3. At the outset, it depends on the timing of the payment and the type of dispute. The taxpayer will be required to pay the following amounts if they decide to settle under the scheme:
4. If the appeal or writ petition is filed by the Income Tax Department and not the taxpayer, the taxpayer only needs to pay half of the amounts mentioned in the table.
5. If a taxpayer files an appeal before the Commissioner (Appeals) or Joint Commissioner (Appeals) or raises objections before the Dispute Resolution
Panel on an issue where they have already received a favourable decision from the Income Tax Appellate Tribunal (ITAT) or the High Court (and the decision has not been reversed by a higher court), the amount payable will be reduced to half of amount calculated in table above.
6. Similarly, if an appeal is filed before the ITAT on an issue where the taxpayer already received a favourable decision from the High Court (and it has not been reversed by the Supreme Court), the payable amount will also be reduced to half of amount calculated in table above.
7. Thus, settling searly will save a lot of money.
8. Further to avail the benefit of this scheme what all details need to be furnished?
9. To obtain the benefit from this scheme, a taxpayer/declarant must file a declaration (Form-1) with the jurisdictional income tax authority (Designated Authority). The declaration should be in the prescribed form, detailing the particulars of the tax arrears such as disputed tax, interest, penalty, or fee. Once the declaration is filed, all pending appeals or petitions before the authorities will be considered withdrawn. If any writ or special leave petitions have been filed in higher courts, the taxpayer/declarant must also withdraw them after receiving approval for the scheme
10. Once the declaration is filed, the jurisdictional income tax authority will determine the amount payable within 15 days and issue a certificate (Form-2) to the taxpayer/declarant with the necessary details. The taxpayer/declarant then has 15 days from receiving the certificate to make the payment and inform the designated authority (Form-3). All related cases will be withdrawn, and no further action will be taken on those issues once Order (Form-4).
11. To summarize, four key forms have been notified in the scheme:
i. Form-1: For filing the declaration and undertaking by the taxpayer.
ii. Form-2: Certificate issued by the Designated Authority.
iii. Form-3: For informing the payment made by the taxpayer.
iv. Form-4: Order for final settlement by the Designated Authority.
12. Most important thing to be kept in mind that anyone and everyone cannot take benefit from this scheme. This scheme has some exclusions. If taxpayers case involves serious offences like undisclosed foreign assets, or if the tax department found hidden income during a search, this scheme won’t apply. For regular tax disputes, though, most taxpayers will qualify.
Conclusion:
This scheme gives taxpayers a peaceful way to resolve their disputes and clear their past records. Settling early saves money, brings peace of mind, and let’s you focus on the future without the tax department constantly knocking on your door. The taxpayers should not miss this opportunity and close their disputes.
