Direct Tax Vivad se Vishwas Scheme, 2024: Settle Your Tax Disputes with Ease

The Direct Tax Vivad se Vishwas Scheme, 2024 (VSV Scheme, 2024) is part of the Finance (No.2) Bill, 2024, designed to help taxpayers settle ongoing income tax disputes effortlessly. Eligible individuals can resolve their pending tax issues by paying only a fraction of what they owe. This scheme builds upon the success of the Vivad se Vishwas Scheme from 2020, making tax dispute resolution more accessible than ever.

Eye-Catching Benefits

Pay Less, Settle More: Save up to 50% on your disputed tax amount if specific conditions are met!

Quick and Hassle-Free: Complete the process in just 30 days—from declaration to payment!

Immunity Guaranteed: Enjoy protection from new legal actions and penalties related to the tax arrears covered by the scheme.

No Acceptance of Tax Position: Declaring your dispute does not mean conceding to the tax authority’s position.

Eligibility for the VSV Scheme, 2024

1. Pending Appeals: 

Your appeal, writ petition, or special leave petition is still active with the Commissioner of Income Tax (Appeals), ITAT, High Court, or Supreme Court as of July 22, 2024. 

Example: You have a pending case in the ITAT regarding a ₹30,000 tax dispute.

2. Draft Assessment Objections: 

You’ve filed objections against a draft assessment order with the Dispute Resolution Panel (DRP), and they haven’t provided any directions to the Assessing Officer by July 22, 2024. 

Example: You objected to a draft order stating you owe ₹20,000.

3. DRP Directions Without Final Order: 

The DRP has issued directions to the Assessing Officer, but they haven’t finalized the assessment order by July 22, 2024. 

Example: The DRP has instructed the AO on your case, but no final order has been issued yet.

4. Pending Revision Application: 

You have a revision application filed under section 264 of the Income Tax Act, and it’s still pending as of July 22, 2024. 

Example: You filed a revision application for a disputed ₹10,000 penalty.

Understanding Disputed Amounts in the VSV Scheme, 2024

When navigating tax disputes under the VSV Scheme, 2024, it’s essential to understand the various components of what you may owe. Here’s a detailed breakdown of the key terms related to disputed amounts:

1. Disputed Tax

Disputed Tax refers to the amount of tax that you would be required to pay if you lose your appeal against the income tax authority’s assessment. This amount is what is at stake in your dispute.

Example: Suppose the tax authority has assessed you with a tax liability of ₹50,000 based on their findings. If you appeal this decision and the court rules against you, you will owe this full amount of ₹50,000.

Importance: Understanding your Disputed Tax is crucial as it forms the basis of your financial obligation should your appeal not succeed.

 2. Disputed Interest

Disputed Interest pertains to the interest charged on the Disputed Tax amount, which is calculated based on the provisions of the Income Tax Act. This interest is applied in cases where the tax authority believes that the taxpayer has delayed payment or has underreported their income.

Example: If you are disputing an assessed tax liability of ₹50,000 and the authority claims an additional ₹5,000 in interest due to the delay in payment, this ₹5,000 represents your Disputed Interest.

Importance: Disputed Interest can significantly increase the total amount owed, making it essential to consider when negotiating settlements.

3. Disputed Penalty

Disputed Penalty refers to penalties imposed by the tax authority that you are contesting. These penalties can arise from various reasons, including non-compliance, late filing, or inaccuracies in reporting.

Example: If you receive a notice stating that you owe a penalty of ₹10,000 for late filing of your tax return, and you decide to appeal this penalty, the ₹10,000 is your Disputed Penalty.

Importance: Penalties can add a substantial financial burden, so addressing them in your appeal is vital for reducing your overall tax liability.

4. Disputed Fee

Disputed Fee involves fees charged by the tax authority under the Income Tax Act that you are challenging. These fees may include administrative fees, late fees, or any other charges imposed during the assessment process.

Example: If the tax authority has charged you ₹2,000 for late submission of documents, and you decide to contest this charge, then this amount is classified as your Disputed Fee.

Importance: While fees may seem minor compared to tax or penalties, they can accumulate and affect your overall financial position, making it necessary to address them in your dispute.

Key Points of the VSV Scheme, 2024

Reduced Payment Scenarios

You only need to pay 50% of the amount due in these cases:

– If the pending case was initiated by the Income Tax Authorities.

– If you received a favorable ruling from a higher appellate forum on any issue, and that decision hasn’t been reversed.

Procedure to Avail the VSV Scheme, 2024

1. Filing a Declaration:

– Submit a declaration with specified details to the Designated Authority, a tax officer not below the rank of CIT.

– Once filed, any related appeals will be considered withdrawn upon receiving a certificate from the Designated Authority.

– Withdraw any pending appeals or writ petitions.

– Provide an undertaking waiving your right to seek remedies regarding the tax arrears.

2. Payment Timeline:

– The Designated Authority will issue a certificate detailing the tax arrears and amount payable within 15 days of your declaration.

– You must make the payment within 15 days of receiving the certificate and notify the Designated Authority.

Cases Not Covered Under the VSV Scheme, 2024

The scheme does not apply in the following situations:

– Assessments based on searches under sections 132 or 132A of the Income Tax Act.

– Prosecutions initiated before you file your declaration.

– Undisclosed income or assets from outside India.

– Assessments based on information from Double Taxation Avoidance Agreements.

– Orders of detention under specific laws that haven’t been revoked.

– Notifications under the Special Court (Trial of Offences Relating to Transactions in Securities) Act prior to your declaration.

Other Features of the VSV Scheme, 2024

No Concession of Tax Position: Making a declaration does not mean you accept the tax position.

Legal Immunity: You will receive immunity from any new proceedings (including prosecution) or penalties regarding the tax arrears addressed in the scheme.

Strategic Decision-Making: It’s advisable to review your pending tax litigation to determine if opting for the VSV Scheme, 2024 is beneficial based on your chances of success and ongoing costs.

FAQs

Q1: What is the main benefit of the VSV Scheme, 2024? 

A1: The main benefit is the opportunity to resolve tax disputes by paying only a portion of the owed amount, significantly reducing financial pressure.

Q2: How do I know if I’m eligible? 

A2: Check if you have pending appeals, draft assessment objections, DRP directions without a final order, or a pending revision application.

Q3: What if I do not withdraw my appeals? 

A3: If you do not withdraw your appeals after filing for the scheme, you may not be eligible for the benefits.

Q4: Is there a deadline to apply for the scheme? 

A4: Yes, ensure you apply and meet eligibility criteria by July 22, 2024.

Q5: What happens if my case is not covered under the scheme? 

A5: If your case falls under the exclusions, you will need to resolve your disputes through the regular legal process.

Take control of your tax disputes today! The VSV Scheme, 2024 offers a practical and cost-effective way to settle your issues. Don’t miss out on this opportunity for relief!