Tax disputes: In the Budget 2024 speech, Union Finance Minister Nirmala Sitharaman unveiled the Vivad Se Vishwas Scheme to assist taxpayers in resolving their tax disputes with the income tax department. This scheme allows taxpayers to settle their outstanding tax liabilities by paying the disputed amount along with a defined percentage. By doing so, taxpayers can put an end to their disputes and avoid incurring additional penalties.
Taxpayers should complete their payments and submit the necessary application form by December 31, 2024, to take advantage of lower settlement costs before the year comes to a close.
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Under this scheme, taxpayers must pay the disputed tax amount in addition to a specified percentage of the disputed tax amount. Upon depositing the specified amount to the government along with the application form, the income tax department will eliminate all extra penalties, penal interest, and close the tax dispute case.
This favourable opportunity is only valid until December 31, 2024. Any applications submitted on or after January 1, 2025, will not qualify for reduced tax rates under the Vivad Se Vishwas Scheme.
Taxpayers who submit a declaration before December 31, 2024, must pay 100 percent of the disputed tax demand. In such cases, interest and penalties will be waived. For declarations made on or after January 1, 2025, taxpayers are required to pay 110 percent of the disputed tax demand.
Charges on Dec 31, 2024 vs Jan 1, 2025
As per the Income Tax department notice, the penalty charges are as follows:
Tax arrears include disputed tax, interest, penalty (New appellant)
Amount payable on Dec 31, 2024: 100% of disputed tax
Amount payable on Jan 1, 2025: 110% of disputed tax
Tax arrears include disputed tax, interest, penalty (Old appellant)
Amount payable on Dec 31, 2024: 110% of disputed tax
Amount payable on Jan 1, 2025: 120% of disputed tax
Tax arrears related to disputed interest/penalty/fee (New appellant)
Amount payable on Dec 31, 2024: 25% of disputed interest/penalty/fee
Amount payable on Jan 1, 2025: 30% of disputed interest/penalty/fee
Tax arrears related to disputed interest/penalty/fee (Old appellant)
Amount payable on Dec 31, 2024: 30% of disputed interest/penalty/fee
Amount payable on Jan 1, 2025: 35% of disputed interest/penalty/fee
As per the guidelines provided by the Income Tax Department, any pending appeals as of July 22, 2024, will be considered for inclusion in the Vivad Se Vishwas Scheme 2024, irrespective of their final outcome (withdrawn or disposed of).
As per the FAQs issued by the CBDT, individuals are required to make a declaration before December 31, 2024, in order to qualify for the program. If a pending appeal as of July 22, 2024, gets resolved prior to submitting the declaration, the disputed tax amount will be calculated as if the appeal was still ongoing. Despite this, the appeal will remain eligible for resolution under the program.
According to the Income Tax Department, the declarant is required to submit Form 1 and Form 3 electronically through the e-filing portal at www.incometax.gov.in. Form 4 will be issued by the income tax department upon the closure of the income tax dispute.
Eligibility to apply
Individuals with ongoing appeals, written petitions, or special leave petitions as of July 22, 2024.
Stakeholders who have submitted objections to the Dispute Resolution Panel prior to July 22, 2024, and are awaiting a resolution.
Cases where the DRP has provided instructions but the assessment is still pending as of July 22, 2024.
Applicants with revision applications under Section 264 that are still pending as of July 22, 2024.
Forms for Vivad Se Vishwas Scheme 2.0
Form 1: Declaration and Undertaking form for submission by the declarant.
Form 2: Certificate to be provided by the Designated Authority.
Form 3: Notification of payment form to be submitted by the declarant.
Form 4: Final settlement order for tax arrears issued by the Designated Authority.