The Indian Government introduced Vivad Se Vishwas Scheme 2.0 in the 2024 Union Budget to resolve long-pending income tax disputes. This scheme is effective from 1st October 2024, is designed to simplify the process for taxpayers to settle disputes by paying a portion of their tax dues. In this blog, we’ll cover the essential details, including eligibility, payment terms, and the application process.

Introduction, Applicability to Vivad Se Vishwas Scheme 2.0, Amount Payable Under the Scheme

Introduction to Vivad Se Vishwas Scheme 2.0 :

The Vivad Se Vishwas Scheme 2.0 aims to reduce the burden of litigation in income tax disputes. It allows eligible taxpayers to settle their cases by paying a percentage of the disputed tax amount or penalties. The goal is to promote quick resolution and ease the burden on both taxpayers and the tax authorities.

Applicability of the Vivad Se Vishwas Scheme 2.0 :

This scheme applies to disputes that are under appeal, including:

·         Appeals pending as of 22nd July 2024: This includes cases at the Supreme Court, High Court, Income Tax Appellate Tribunal (ITAT), and Commissioner/Joint Commissioner (Appeals).

·         Dispute Resolution Panel (DRP): If the DRP has passed an order, but the final assessment order is still awaited.

·         Revision applications under Section 264: Any application filed under this section of the Income Tax Act, 1961, can also be resolved through this scheme.

Amount Payable Under the Scheme :

The amount that taxpayers need to pay depends on the timing of their appeal:

For cases where the tax authorities have filed the appeal or a lower authority ruled in favor of the taxpayer, the amount payable will be 50% of the above.

Special Cases: In disputes involving Minimum Alternate Tax (MAT) or Alternative Minimum Tax (AMT) credits, taxpayers can either include these credits in the disputed amount or carry them forward for future tax years.

How to Apply Notified Forms and Important Points to Consider

How to Apply: Notified Forms :

To settle disputes under this scheme, the following forms are required:

·         Form-1: Declaration and Undertaking by the taxpayer (declarant).

·         Form-2: Certificate issued by the Designated Authority.

·         Form-3: Intimation of payment, which must be submitted along with proof of withdrawal of the appeal.

·         Form-4: Final settlement order by the Designated Authority.

Forms must be submitted electronically. Form-1 should be filed separately for each dispute, but if both the taxpayer and the income tax authority have appealed the same order, only a single Form-1 is necessary.

Important Points to Consider :

·         Filing a declaration does not mean the taxpayer accepts the tax assessment.

·         The scheme offers immunity from further penalties or interest once a case is settled.

·         It excludes certain disputes such as cases involving search and seizure, prosecution, undisclosed income, or assets held abroad.

Conclusion :

The Vivad Se Vishwas Scheme 2.0 offers taxpayers a chance to resolve their pending disputes efficiently, saving time and resources. With reduced penalties and immunity from additional proceedings, it presents a simplified path to close outstanding tax matters.

By understanding the eligibility, payment terms, and application process, taxpayers can take advantage of this scheme before the year-end deadline.