Time to negotiate your Tax Bills with Income Tax department – Direct Tax Vivad Se Vishwas Scheme, 2024 (DTVSV 2024)

The Direct Tax Vivad Se Vishwas Scheme, 2024 (DTVSV 2024): Simplifying Tax Dispute Resolution

The Direct Tax Vivad Se Vishwas Scheme, 2024 (DTVSV 2024) is a transformative government initiative designed to address and resolve pending income tax disputes in India. Announced in the Union Budget 2024-25, this scheme builds on the success of the Vivad Se Vishwas Scheme of 2020, aiming to reduce the backlog of tax-related litigation and provide taxpayers with a streamlined pathway to settle their disputes amicably.

Overview of the Scheme

• Effective Date: The scheme will come into force on October 1, 2024.
• Objective:
  • Reduce litigation related to income tax disputes.
  • Generate timely revenue for the government.
  • Provide clarity, peace of mind, and finality to taxpayers by offering a structured mechanism to resolve disputes.
• Scope:
  • The scheme is applicable to appeals pending as of July 22, 2024, across various judicial forums, including the Supreme Court, High Courts, and Income Tax Appellate Tribunals (ITAT).

Key Features

• Categorization of Appellants
  • Old Appellants: Cases filed before January 31, 2020.
    • Old Appellants: 110% of the disputed tax (if arrears exceed ₹10 lakhs); 30% for smaller arrears.
  • New Appellants: Cases filed after January 31, 2020.
    • New Appellants: 100% of the disputed tax (if arrears exceed ₹10 lakhs); 25% for smaller arrears.

Old appellants, who were eligible under the earlier scheme but did not avail of it, are required to pay slightly higher settlement amounts compared to new appellants:

• Settlement Amounts
  • Taxpayers who file declarations by December 31, 2024, will benefit from reduced settlement amounts, whereas those filing later will need to pay higher sums.
• Immunity Provisions
  • Taxpayers opting for the scheme will receive full immunity from penalties, interest, and prosecution concerning the disputed amounts.
  • Declarations under this scheme will not serve as precedents for future cases, safeguarding taxpayers’ rights.

Application Process

The scheme’s implementation involves a transparent and structured three-step process:

1. Filing Declaration:
   • Taxpayers must submit their declaration using Form-I by December 31, 2024.
2. Payment Notification:
   • Within 15 days of receiving the declaration, the Designated Authority will issue a determination of the payable amount through Form-2.
3. Payment Completion:
   • Taxpayers are required to make the payment within 15 days of receiving Form-2 and confirm payment by submitting Form-3.

Exclusions from the Scheme

Certain disputes and cases are excluded from the ambit of DTVSV 2024, ensuring that only appropriate matters are resolved through this framework. These exclusions include:

• Cases involving search and seizure operations.
• Undisclosed income or assets located outside India.
• Proceedings under other specified laws, such as the Black Money Act or the Prevention of Money Laundering Act.

Benefits of the Scheme

The DTVSV 2024 offers a host of advantages for stakeholders:

• For Taxpayers: A quick and cost-effective resolution to long-pending disputes, eliminating uncertainties and associated penalties or interest.
• For the Government: Timely collection of revenue while reducing the burden on judicial systems and tax administration.
• For Judicial Forums: Relief from an overwhelming backlog of pending cases, allowing a focus on critical and complex matters.

By providing a fair, transparent, and time-bound mechanism to settle disputes, the Direct Tax Vivad Se Vishwas Scheme, 2024, underscores the government’s commitment to creating a taxpayer-friendly environment. It not only strengthens trust between taxpayers and the administration but also ensures smoother functioning of the judicial system while maximizing revenue collection.

What Are the Benefits of the Vivad Se Vishwas Scheme, 2024 for Taxpayers?

The Vivad Se Vishwas Scheme, 2024 (DTVSV 2024) offers a host of benefits to taxpayers, making it a significant initiative in resolving income tax disputes in India. Below are the key advantages taxpayers can enjoy under this scheme:

1. Reduced Financial Burden:
   • Taxpayers can settle pending disputes by paying a reduced portion of the outstanding tax liability. This alleviates their financial strain compared to continuing prolonged litigation.
2. Immunity from Penalties and Interest:
   • Participants in the scheme are granted immunity from additional penalties, interest, or prosecution related to the settled dues, ensuring comprehensive relief.
3. Simplified Dispute Resolution Process:
   • The scheme offers clear guidelines and user-friendly procedures, including electronic filing options, making it convenient for taxpayers to resolve their disputes.
4. Wide Eligibility Coverage:
   • Applicable to disputes pending as of July 22, 2024, it encompasses cases at multiple judicial levels, including the Supreme Court, High Courts, and Tribunals, providing relief to a broad category of taxpayers.
5. Refunds for Excess Payments:
   • Taxpayers can claim refunds for any amounts paid in excess prior to filing their declarations under the scheme, offering further financial benefit.
6. No Precedents for Future Disputes:
   • Settlements made under this scheme do not set legal precedents, ensuring that taxpayers are not adversely affected in future litigation.
7. Encouragement for Voluntary Compliance:
   • By reducing the complexities and costs of dispute resolution, the scheme fosters a more compliant and cooperative taxpayer base.
8. Peace of Mind and Finality:
   • Taxpayers achieve certainty regarding their tax liabilities, enabling them to focus on their financial planning without the stress of unresolved disputes.

Overall, the Vivad Se Vishwas Scheme, 2024, is a win-win initiative that simplifies dispute resolution, reduces litigation, and promotes efficient revenue collection while enhancing trust between taxpayers and the government.

What Forms Are Required Under the Vivad Se Vishwas Scheme, 2024?

To facilitate the structured settlement of disputes, taxpayers need to submit the following forms under the scheme:

1. Form 1:
   • Purpose: For filing the declaration and undertaking by the taxpayer to settle the dispute.
   • Details Required: Taxpayer information, dispute details, and an undertaking to withdraw any related legal proceedings.
2. Form 2:
   • Purpose: Issued by the designated authority, it certifies the determined tax arrears and specifies the amount payable by the taxpayer.
3. Form 3:
   • Purpose: Submitted by the taxpayer to inform the designated authority of the payment made, along with proof of appeals or objections withdrawn.
4. Form 4:
   • Purpose: Issued by the designated authority as the final order confirming that the taxpayer has settled the dispute and paid the dues.

These forms ensure a transparent and efficient process for taxpayers participating in the scheme.

Can Form-4 Be Challenged After It Is Issued?

No, Form-4 issued under the Vivad Se Vishwas Scheme, 2024, represents the final order confirming the settlement of the tax dispute. It cannot be challenged or appealed once issued. Taxpayers must exercise diligence and verify all details before submitting their declarations, as the issuance of Form-4 signifies the conclusive resolution of the dispute.

What Happens If the Payment Details in Form-3 Are Incorrect?

If the payment details in Form-3 are incorrect, it can lead to complications in the settlement process. The designated authority may issue a show cause notice to the taxpayer, requesting an explanation for the discrepancy.

Steps to Address Errors:

1. Provide Clarification: Taxpayers should clarify that the error was unintentional and provide evidence of the correct payment.
2. Submit Supporting Documents: Proof of payment and any relevant documents must be submitted to substantiate the claim.
3. File an Affidavit: If required, taxpayers may need to file an affidavit to document the error formally.
4. Rectify Promptly: Timely action can prevent delays and ensure compliance with the scheme’s requirements.

Genuine mistakes are unlikely to attract penalties if rectified quickly, but accuracy is essential to avoid unnecessary complications.

What Documents Are Required to Accompany Form-3?

The documents typically required to accompany Form-3 under the Vivad Se Vishwas Scheme, 2024, include:

1. Proof of Payment: Evidence of the tax amount paid, such as a bank challan or transaction receipt.
2. Declaration of Withdrawal: Confirmation that all appeals, objections, or proceedings related to the disputed tax have been withdrawn.
3. Supporting Documents: Any additional documents supporting the taxpayer’s declarations or calculations related to the dispute.

Ensuring that these documents are accurate and complete is crucial for a smooth and hassle-free resolution.

What Information Is Required to File Form-1?

To file Form-1 under the Vivad Se Vishwas Scheme, 2024, taxpayers must provide the following details:

1. Taxpayer Information:
   • Name, PAN (Permanent Account Number), and contact details of the declarant.
2. Dispute Details:
   • Nature of the dispute, including assessment year, tax arrears, and the quantum of the disputed tax, interest, or penalty.
3. Declaration of Intent:
   • A statement of the taxpayer’s intention to settle the dispute under the scheme.
4. Undertaking:
   • A commitment to withdraw all pending appeals or proceedings related to the dispute.
5. Verification:
   • The declaration must be verified by the taxpayer or an authorized person eligible to verify income tax returns.

Taxpayers should note that each dispute requires a separate Form-1 unless both the taxpayer and the tax authorities have filed appeals on the same order. The designated authority will electronically acknowledge receipt of Form-1, ensuring transparency and accountability.

By addressing these procedural requirements meticulously, taxpayers can leverage the benefits of the Vivad Se Vishwas Scheme, 2024, and achieve a swift resolution to their tax disputes.

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