The Vivad se Vishwas Scheme 2024 (VSV 2024) has been introduced as a strategic measure by the government to address the significant backlog of tax litigation. This scheme is aimed at providing a structured and efficient resolution mechanism for pending disputes, building upon the success of the earlier Vivaad Se Vishwas Act, 2020. Below, we present a detailed analysis of the scheme, highlighting its critical aspects with important conditions and dates in bold for ease of understanding.
Rationale Behind VSV 2024
The introduction of VSV 2024 aligns with the government’s ongoing commitment to simplifying tax processes and reducing litigation. The urgency of this initiative is underscored by the staggering number of 3,61,748 appeals pending before the first appellate authority (CIT(A)) as of January 1, 2024. Recognizing this challenge, the government is committed to deploying additional resources to expedite the resolution of these cases.
Key Objectives of the Scheme:
- Reduction of Pending Litigation: By providing an avenue for amicable settlement, the scheme aims to significantly decrease the volume of ongoing tax disputes.
- Revenue Generation: Encouraging taxpayers to settle their disputes through this scheme is also expected to boost government revenues.
- Relief to Taxpayers: Taxpayers can benefit from a waiver of interest, penalties, and immunity from prosecution by opting for the scheme.
Eligibility Criteria
Who is Eligible?
- Taxpayers with Pending Appeals: The scheme is applicable to taxpayers whose appeals, writ petitions, or Special Leave Petitions (SLPs) are pending as of July 22, 2024.
- Cases Before the Dispute Resolution Panel (DRP): If objections were filed before the DRP and no directions were issued by July 22, 2024, these cases are also eligible.
- Pending Revision Applications: Applications for revision under Section 264 of the Income Tax Act, if pending on July 22, 2024, are covered under this scheme.
What Disputes are Covered?
- Disputed Tax: The primary tax amount that is under dispute.
- Disputed Interest, Penalty, or Fee: Any interest charged, penalties levied, or fees associated with the disputed tax.
Options for MAT/AMT Credit:
- Taxpayers can choose to include or exclude Minimum Alternate Tax (MAT), Alternate Minimum Tax (AMT) credit, loss, or depreciation when calculating the disputed tax amount.
Payment Structure
The amount payable under the scheme varies depending on when the appeal was filed and the type of tax arrear. The following tables outline the payment structure:
Table 1: Payment Structure for Disputed Tax
| Nature of Tax Arrear / Appeal Proceedings | Amount Payable Before December 31, 2024 | Amount Payable After January 1, 2025 |
|---|---|---|
| Appeal filed between Jan 31, 2020, and Jul 22, 2024 | 100% of disputed tax | 110% of disputed tax |
| Appeal filed before Jan 31, 2020 | 110% of disputed tax | 120% of disputed tax |
| Disputed Interest / Penalty / Fee (filed between Jan 31, 2020, and Jul 22, 2024) | 25% of disputed interest / penalty / fee | 30% of disputed interest / penalty / fee |
| Disputed Interest / Penalty / Fee (filed before Jan 31, 2020) | 30% of disputed interest / penalty / fee | 35% of disputed interest / penalty / fee |
Table 2: Payment Structure for Special Scenarios
| Scenario | Amount Payable Before Dec 31, 2024 | Amount Payable After Jan 1, 2025 |
|---|---|---|
| Appeal by Income Tax Authority, taxpayer won at ITAT (not reversed by HC/SC) | 50% of disputed tax | 55% of disputed tax |
| Appeal before Jan 31, 2020 | 55% of disputed tax | 60% of disputed tax |
| Disputed Interest/Penalty/Fee (post-Jan 31, 2020 appeal) | 12.5% of disputed interest / penalty / fee | 15% of disputed interest / penalty / fee |
| Disputed Interest/Penalty/Fee (pre-Jan 31, 2020 appeal) | 15% of disputed interest / penalty / fee | 17.5% of disputed interest / penalty / fee |
Procedural Steps and Deadlines
- Declaration Filing: Taxpayers (declarants) must file a declaration under the scheme to settle tax arrears by the specified deadline.
- Amount Determination: The designated authority will determine the amount payable within 15 days of receiving the declaration.
- Payment and Confirmation: Taxpayers must make the payment within 15 days of receiving the certificate. Following this, the authority will confirm the settlement and ensure no further proceedings are initiated for the settled dispute.
Refund and Non-Applicability
- If a taxpayer has already paid more than the required amount under this scheme, they are eligible for a refund. However, no interest will be paid on such refunds.
- Exclusions: The scheme does not apply to certain cases such as those involving foreign income, money laundering, or benami transactions.
Conclusion
The Vivad se Vishwas Scheme 2024 represents a proactive approach by the government to resolve tax disputes, reduce the burden on judicial authorities, and improve overall tax administration. By providing clear guidelines and substantial benefits, the scheme is expected to expedite the resolution of disputes and enhance compliance, ultimately fostering a more efficient tax environment.
