Vivad Se Vishwas 2024: Settling Tax Disputes Made Easy - Key Highlights

Insights by CA Butchi Babu Gorantla

Effective from 1st October 2024

The Vivad Se Vishwas Scheme 2.0 (VSV 2.0), introduced by the Government, is a pivotal initiative aimed at reducing the burden of litigation in direct tax matters and expediting revenue generation. This scheme is not just an opportunity for resolution but a strategic move to streamline tax compliance and offer taxpayers a path to certainty in disputes.

Key Objectives of VSV 2.0:

• Reduction in Litigation: VSV 2.0 seeks to significantly alleviate the massive backlog of tax disputes, promoting a faster, more efficient resolution mechanism.
• Immediate Revenue Mobilization: The scheme is designed to unlock revenue for the exchequer by encouraging swift settlement of pending cases.
• Relief for Taxpayers: Offering an amicable and less confrontational approach to resolving disputes, VSV 2.0 provides much-needed relief from prolonged litigation and the anxiety of tax demands.

Eligibility for VSV 2.0:

Taxpayers eligible for this scheme include those who have:

• Appeals, writ petitions, or special leave petitions (SLPs) pending before the Supreme Court, High Court, ITAT, or Commissioner (Appeals) as of 22nd July 2024.
• Filed objections with the Dispute Resolution Panel (DRP) without receiving directions.
• Received DRP directions, but where the Assessing Officer (AO) has not yet completed the assessment.
• Filed revision applications under Section 264, which remain pending as of 22nd July 2024.

Payable Amounts Under VSV 2.0:

The payable amount varies depending on the nature and timing of the dispute. Below is a structured breakdown:

• Prior Scheme Disputes: If unresolved by 22nd July 2024, taxpayers are required to pay 110% of the disputed tax. For other eligible disputes, 100% of the disputed tax is payable.
• Post 31st December 2024 Settlements: An additional 10% is applicable for disputes settled after this date.
• Penalty and Interest Disputes: For these cases, a 30-35% payment structure is applied depending on the timing.

Reductions and Refunds:

• 50% Reduction: If the appeal was decided in favor of the taxpayer by ITAT, High Court, or Supreme Court (and not reversed) or if the case was initiated by tax authorities, the payable amount is reduced by 50%.
• Refunds: Any excess payments made beyond what is required under VSV 2.0 will be refunded, although no interest will be provided on these refunds.

Declaration and Procedure:

1. Declaration Filing: Taxpayers must file a declaration under Section 91.
2. Appeal Withdrawal: Upon filing, all pending appeals are considered withdrawn.
3. Certificate Issuance: Within 15 days, a certificate from the designated authority will determine the amount payable, which must be paid within 15 days of certificate issuance.
4. Final Orders: The final order of settlement will follow, based on a date to be notified by the authorities.

Complete Immunity:

VSV 2.0 provides taxpayers with full immunity from any additional penalties, interest, or prosecution on matters settled under the scheme. This immunity is exclusively for the issues covered in the declaration, offering taxpayers peace of mind and a clean slate moving forward.

Non-Applicability:

The scheme is not applicable in cases involving:

• Assessments or reassessments under Sections 144, 147, 143(3), 153A, 153C, 132, or 132A.
• Instances where prosecution has been initiated prior to the declaration.
• Cases involving undisclosed income or assets located outside India.
• Legal provisions under Benami Transactions, Money Laundering, and the Bharatiya Nyaya Sanhita.

Final Thoughts

The Vivad Se Vishwas 2.0 presents a golden opportunity for taxpayers to resolve their long-standing disputes and bring closure to prolonged litigation. By embracing this scheme, taxpayers can alleviate their tax burdens and shift focus toward growth and compliance.

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