The Direct Tax Vivad Se Vishwas Scheme, 2024 (DTVSV 2024) is a pivotal initiative by the Indian government aimed at resolving pending direct tax disputes. Effective from October 1, 2024, this scheme enables taxpayers to settle their disputes with the Income Tax Department under favorable terms, promoting compliance and reducing litigation.
1. Objectives of the Scheme
- Reduce Litigation Backlog: Alleviate the pressure on judicial resources by minimizing the number of pending tax cases.
- Facilitate Voluntary Compliance: Encourage taxpayers to resolve their disputes and comply with tax laws.
- Financial Relief: Provide substantial reductions in taxes, penalties, and interest for early settlements.
2. Legal Framework
The scheme operates under the Vivad Se Vishwas Act, 2024, detailing the eligibility, exclusions, procedures, and settlement terms. It is designed to offer a structured approach for resolving disputes and includes:
- Definition of Eligible Disputes: Any disputes related to direct taxes under the Income Tax Act, 1961.
- Scope of Settlement: Settlements can include disputes over disputed tax amounts, penalties, and interest.
3. Eligibility Criteria
Taxpayers can avail themselves of the scheme if they meet the following criteria:
- Pending Appeals: Must have pending appeals or writ petitions before:
- Supreme Court
- High Courts
- Income Tax Appellate Tribunal (ITAT)
- Commissioner of Income Tax (Appeals) (CIT-A)
- Types of Disputes: Includes disputes over tax assessments, interest, penalties, and cases arising from search and seizure.
4. Exclusions from the Scheme
The following cases are not eligible for settlement under the DTVSV 2024:
| Exclusion Category | Details |
|---|---|
| Prosecution Cases | Involves serious offences like wilful tax evasion or concealment. |
| Undisclosed Foreign Income/Assets | Related to income or assets that have not been disclosed to the authorities. |
| Benami Transactions | Governed by the Benami Transactions (Prohibition) Act, these involve hidden ownership. |
| Serious Tax Offences | Includes cases under the Prevention of Money Laundering Act (PMLA) and others. |
5. Settlement Terms and Payment Structure
The financial relief offered under the scheme varies based on the timing of the settlement and the nature of the dispute. Here’s a detailed breakdown:
| Nature of Dispute | Settlement Amount (Before December 31, 2024) | Settlement Amount (After December 31, 2024) |
|---|---|---|
| Disputed Tax | 100% of the disputed tax | 110% of the disputed tax |
| Disputed Penalty | 25% of the disputed penalty | 30% of the disputed penalty |
| Disputed Interest | 25% of the disputed interest | 30% of the disputed interest |
| Search and Seizure Cases | 100% of tax on undisclosed income | 110% of tax on undisclosed income |
| Transfer Pricing Adjustments | As per applicable percentages of disputed tax | Additional surcharge of 10% to 20% post-December 31, 2024 |
6. Procedure for Availing the Scheme
The process for taxpayers to settle their disputes is straightforward:
| Step | Action Required |
|---|---|
| Step 1: Declaration Filing | Submit an electronic declaration through the Income Tax e-filing portal. |
| Step 2: Withdrawal of Appeal | Withdraw any related appeals or writ petitions from the courts/tribunals. |
| Step 3: Calculation of Amount | Tax authorities will compute the payable amount based on the declaration. |
| Step 4: Payment of Amount | Pay the determined amount within 30 days of receiving the order. |
| Step 5: Issuance of Certificate | Receive a settlement certificate upon payment, finalizing the dispute. |
7. Key Dates and Timeline
| Milestone | Date |
|---|---|
| Scheme Commencement | October 1, 2024 |
| Early Settlement Deadline | December 31, 2024 |
| Late Settlement Surcharge Begins | January 1, 2025 |
8. Benefits of the Scheme
The DTVSV 2024 offers several advantages to eligible taxpayers:
| Benefit | Explanation |
|---|---|
| Financial Relief | Substantial reductions in disputed taxes, penalties, and interest, leading to lower overall liabilities. |
| Time Efficiency | Quick resolution of disputes saves time and avoids prolonged litigation costs. |
| Certainty and Finality | Settlements close disputes definitively, preventing future claims or reopening of cases. |
| Encourages Compliance | Facilitates voluntary compliance, encouraging taxpayers to settle past issues amicably. |
| Simplified Process | Clear and straightforward procedural steps make participation easy for taxpayers. |
9. Strategic Considerations for Taxpayers
- Evaluate Your Case: Taxpayers should assess their individual situations and the strength of their positions before deciding to settle.
- Consider Financial Impact: Calculate potential savings from reduced penalties and interest against the total disputed amount.
- Consult Professionals: Seek advice from tax consultants or chartered accountants to navigate the complexities of the scheme effectively.
10. Conclusion
The Direct Tax Vivad Se Vishwas Scheme, 2024 presents a valuable opportunity for taxpayers to resolve long-standing tax disputes efficiently and affordably. The scheme is particularly advantageous for those with significant tax liabilities, as it offers a clear pathway to compliance while reducing financial burdens.
