Direct Tax Vivad se Vishwas Scheme, 2024: All Bizmen and Tax Professionals Need to Know

The Central Board of Direct Taxes ( CBDT ) has officially announced the launch of the Direct Tax Vivad Se Vishwas Scheme, 2024 ( DTVSV ), set to take effect on October 1, 2024. Introduced by Finance Minister Nirmala Sitharaman during the Union Budget 2024-25, this initiative aims to streamline the resolution of tax disputes and reduce litigation..

Key Features and Benefits

The DTVSV Scheme provides taxpayers with an opportunity to settle disputes at reduced amounts. Those who submit their declarations by 31st December 2024will benefit from lower settlement amounts, incentivizing timely participation. New appellants under the scheme will also enjoy more favorable terms compared to those who have already appealed, making this initiative especially attractive to those seeking to resolve disputes early.

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To ensure smooth implementation, the CBDT has outlined four specific forms for taxpayers to use:

1. Form-1: A declaration and undertaking by the declarant, to be filed separately for each dispute.
2. Form-2: A certificate issued by the Designated Authority.
3. Form-3: Used for notifying payments made by the declarant.
4. Form-4: Represents the final order for the settlement of tax arrears.

Filing Process

Taxpayers will need to file Forms 1 and 3 electronically through the Income Tax Department‘s e-filing portal. Alongside Form-3, they must submit payment notifications and proof of withdrawal of any related appeals. Joint appeals filed by both the appellant and the income tax authority can be handled with a single Form-1 submission, simplifying the process.

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Who will benefit from this scheme?

As per the Finance Act, 2024 the Direct Tax Vivad Se Vishwas Scheme, 2024 can be used by the following appellants:

• A person who has filed his objections before the Dispute Resolution Panel under section 144C of the Income-tax Act and the Dispute Resolution Panel has not issued any direction on or before the specified date; or

• A person in whose case the Dispute Resolution Panel has issued direction under sub-section (5) of section 144C of the Income-tax Act and the Assessing Officer has not completed the assessment under sub-section (13) of that section on or before the specified date; or

• A person who has filed an application for revision under section 264 of the Income-tax Act and such application is pending as on the specified date, or

• A person in whose case an appeal or a writ petition or special leave petition has been filed either by him or by the income-tax authority or by both, before an appellate forum and such appeal or petition is pending as on the specified date.

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Objectives and Mechanism of VSV 2.0

The Vivad Se Vishwas 2.0 aims to reduce the burden of litigation on taxpayers and the judicial system by offering a cost-effective mechanism for settling disputed tax issues. By settling these disputes, taxpayers can avoid penalties and interest, and no prosecution will be initiated for cases resolved under this scheme.

However, certain cases will not be eligible for settlement, such as:

• Cases involving assessments based on searches.
• Cases where prosecution has already been instituted.
• Tax disputes involving undisclosed foreign income or assets.
• Cases involving information from foreign jurisdictions.
• Cases where the taxpayer has been convicted under laws like the Money Laundering Act or the Benami Property Transactions Act.

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Conclusion

With the scheme’s official launch set for October, taxpayers and their representatives are encouraged to review their pending disputes to determine eligibility for Vivad Se Vishwas 2.0. This initiative promises to streamline tax dispute resolution, reflecting the government’s ongoing efforts to enhance taxpayer services and reduce the costs associated with litigation. The Direct Tax Vivad Se Vishwas Scheme, 2024 marks a significant step towards simplifying India’s tax framework and providing relief to those entangled in long-standing tax disputes.

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