Direct tax Vivad se Viswas Scheme 2024 to be operational from Oct 1

The scheme aims to reduce income tax litigation by allowing taxpayers to settle pending appeals, writs, and petitions before various appellate authorities, including the Supreme Court and High Courts, as of July 22, 2024 [View in browser]( [See all newsletters]( 20 September 2024 Direct tax Vivad se Viswas Scheme 2024 to be operational from Oct 1 [ VSV 2.0 waives penalties, interest, and prosecution for disputes settled under the scheme, although certain cases, such as those involving serious offences or undisclosed foreign income, are excluded. ] Second edition of the Direct Tax Vivad se Viswas scheme 2024 ([VSV 2.0]( will be operational from October 1, the Finance Ministry has said in a notification. The scheme was announced in the budget to reduce the litigations related with income tax. “In exercise of the powers conferred by sub-section (2) of section 88 of the Finance (No. 2) Act, 2024 (15 of 2024), the Central Government hereby appoints the 1st day of October, 2024 as the date on which the Direct Tax Vivad Se Vishwas Scheme, 2024 shall come into force,” the notification said. However, as of now, no last date has been notified. This notification is in response to finance minister Nirmala Sitharaman’s announcement in the budget, where she said: “For resolution of certain income tax disputes pending in appeal, I am also proposing Vivad Se Vishwas Scheme, 2024.”  According to the budget document, the scheme provides for a mechanism of filing of appeals against orders passed under the proceedings of the Act, both by the taxpayer and the Department before respective appellate fora, such as Joint Commissioner of Income-tax (Appeals), Commissioner of Income-tax (Appeals), the Income-Tax Appellate Tribunal, High Courts and the Supreme Court. - Read: [How Vivad se Vishwas benefits taxpayersÂ]( “It has been the endeavour of the Central Board of Direct Taxes to provide expeditious disposal of appeals by appellate authorities under its administrative control,” the explanatory memorandum said. One such measure was the Direct Tax Vivaad Se Vishwas Act, 2020 (VSV 1.0), launched for appeals pending as of January 31, 2020. The scheme got a very encouraging response from the taxpayers and also garnered substantial revenue for the government. Rising cases The pendency of litigation at various levels has been on the rise due to a larger number of cases going for appeal than the number of disposals. “Keeping in view the success of the previous Vivaad Se Vishwas Act, 2020 and the mounting pendency of appeals at CIT(A) level, introduction of a Direct Tax Vivad se Vishwas Scheme, 2024 is proposed with the objective of providing a mechanism of settlement of disputed issues, thereby reducing litigation without much cost to the exchequer,” the memorandum said. According to consultancy firm Deloitte, before VSV 1.0, there were 483,000 direct tax appeals pending across various forums, with ₹4.96 trillion in tax amounts locked. The said scheme successfully resolved over 1.46 lakhs (30 per cent) of these appeals, resulting in ₹0.54 trillion (11 per cent) in collections for the government. The government forgave ₹0.45 trillion in taxes under this scheme. Further, it said that to be eligible under VSV 2.0, cases must be pending as of the cut-off date of July 22, 2024. Key features and exclusions The scheme allows taxpayers to settle appeals, writ petitions, and special leave petitions pending as of this cut-off date before the Supreme Court, High Courts, ITAT, Commissioner (Appeals), and Joint Commissioner (Appeals). The scheme also covers cases with objections filed before the Dispute Resolution Panel (DRP) where no final assessment order has been issued and pending revision applications before the Commissioner, the firm said. “Settling disputes under VSV 2.0 waives penalties and interest and ensures no prosecution will be initiated. Settlements will not set a precedent for future disputes,” it clarified while adding that appeals involving search cases, prosecution cases, undisclosed foreign income or assets, and certain other situations are excluded from VSV 2.0.  Also, taxpayers under specific legal restrictions or involved in serious offenses, will not get any benefit. 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