Overview of the Direct Tax Vivad Se Vishwas
Overview of the Direct Tax Vivad Se Vishwas The Indian government continues to make strides in simplifying tax administration and resolving long-standing disputes between taxpayers and the authorities. In line with this objective, the Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024, announced in the Union Budget 2024-25, offers taxpayers an opportunity to settle ongoing income tax disputes with favorable terms. Overview of the Direct Tax Vivad Se Vishwas The scheme was introduced by Smt. Nirmala Sitharaman, Union Minister for Finance and Corporate Affairs, and will come into force from 1st October 2024.
This blog will dive into the key aspects of the DTVSV Scheme, 2024, including the provisions, eligibility criteria, and the benefits it offers to taxpayers.
Background and Purpose of the DTVSV Scheme, 2024
Overview of the Direct Tax Vivad Se Vishwas The DTVSV Scheme, 2024, was enacted through the Finance (No. 2) Act, 2024, and is aimed at resolving pending tax disputes in a swift and amicable manner. At its core, the scheme allows taxpayers to settle disputes by paying a reduced amount of the disputed tax, eliminating interest, penalties, and prosecution-related issues. Overview of the Direct Tax Vivad Se Vishwas The idea is to offer a one-time settlement window for taxpayers, which in turn helps the government clear its backlog of litigation and generate revenue in a timely manner.
One of the distinctive features of this scheme is that it provides differential settlement amounts for:
- New appellants (those who have recently filed appeals), and
- Old appellants (those who have ongoing appeals that were filed prior to the notification of the scheme).
This approach rewards those who resolve their disputes earlier in the process.
Notified Forms and Process
Overview of the Direct Tax Vivad Se Vishwas To streamline the implementation of the DTVSV Scheme, 2024, the Central Board of Direct Taxes (CBDT) has issued specific Rules and Forms under Notification No. 104/2024 in G.S.R. 584(E) dated 20th September 2024. The scheme involves a simple and straightforward process, comprising four key forms that must be filed by the taxpayer to settle the disputes.
- Form-1: Declaration and Undertaking by the Declarant
- This is the primary form for initiating the settlement process under the scheme. The taxpayer (declarant) must file this form along with an undertaking to withdraw any appeals, writ petitions, or other legal proceedings related to the disputed tax.
- Importantly, Form-1 must be filed separately for each tax dispute. However, if both the appellant and the Income Tax Authority have filed appeals for the same order, a single Form-1 will suffice.
- Form-2: Certificate by the Designated Authority
- Overview of the Direct Tax Vivad Se Vishwas Once Form-1 is submitted, the designated authority under the Income Tax Department will verify the details and issue a certificate to the declarant via Form-2. This certificate will confirm the amount payable by the taxpayer for settling the dispute.
- Form-3: Intimation of Payment by the Declarant
- After receiving the certificate, the taxpayer must make the payment as per the amount determined by the designated authority. Overview of the Direct Tax Vivad Se Vishwas The payment is then reported to the authority through Form-3.
- Along with the payment, the declarant is also required to furnish proof of withdrawal of any legal proceedings, such as appeals or writ petitions, that were ongoing in relation to the disputed tax.
- Form-4: Order for Full and Final Settlement by the Designated Authority
- After reviewing the payment and verifying the withdrawal of appeals or other legal claims, the designated authority will issue Form-4, signifying the full and final settlement of the tax arrears.
All these forms are to be submitted electronically on the Income Tax Department’s e-filing portal, making the entire process seamless and digital. Overview of the Direct Tax Vivad Se Vishwas Taxpayers can visit the e-filing website www.incometax.gov.in for further details and access to the forms.
Key Provisions of the DTVSV Scheme, 2024
The DTVSV Scheme, 2024, comes with several key provisions designed to encourage quick settlement of disputes, including:
- Reduced settlement amounts for ‘new appellants’ as compared to ‘old appellants.’ This means taxpayers who file fresh appeals have an advantage in terms of lower payments required for settlement.
- Incentives for early settlement: Taxpayers who file their declaration (Form-1) on or before 31st December 2024 will enjoy a lower settlement amount compared to those who file after this deadline. This incentivizes taxpayers to act promptly.
- Dispute-specific filing: Each dispute must be addressed through a separate Form-1 unless both the taxpayer and the income tax authority have filed appeals for the same order, in which case a single form will suffice. Overview of the Direct Tax Vivad Se Vishwas
- Electronic submission: Forms 1 and 3 must be submitted electronically, ensuring a faster, more transparent process.
Benefits for Taxpayers
The DTVSV Scheme, 2024, provides substantial benefits for taxpayers seeking to resolve disputes:
- Reduced financial burden: By allowing taxpayers to settle disputes for less than the full amount in contention, the scheme offers a cost-effective way to resolve tax issues. Interest and penalties are largely waived, making the total amount payable significantly lower than it would be through continued litigation. Overview of the Direct Tax Vivad Se Vishwas
- Simplified dispute resolution: The scheme minimizes the need for protracted litigation, enabling taxpayers to clear their arrears quickly and efficiently.
- Relief from litigation: With the government offering final settlement of tax arrears through Form-4, taxpayers can finally achieve closure on long-standing disputes, freeing them from the burden of ongoing legal proceedings.
- Electronic processing: The ability to submit forms online via the e-filing portal makes the process fast and convenient, reducing the need for physical paperwork or in-person visits to tax offices.
Eligibility for the Scheme
The DTVSV Scheme, 2024, is open to all taxpayers who have pending appeals related to income tax disputes. This includes:
- Disputes at the Appellate Tribunal stage,
- Cases pending before the High Court or Supreme Court,
- Matters under review by the Commissioner of Income Tax (Appeals).
To participate in the scheme, taxpayers must ensure that their dispute falls within the purview of the scheme’s provisions, and they must be willing to withdraw their legal challenges upon filing the declaration.
Conclusion
Overview of the Direct Tax Vivad Se Vishwas The Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024 represents a major step by the Indian government toward easing the tax litigation process and providing taxpayers with an opportunity to resolve disputes with minimal financial stress. By offering reduced settlement amounts, the scheme encourages early action and provides a clear and structured framework for closing cases quickly. With its 1st October 2024 launch, taxpayers should assess their ongoing disputes and take advantage of this window to achieve a speedy resolution.
For more details, taxpayers are encouraged to review the specific provisions of the scheme, outlined in Sections 88 to 99 of the Finance (No. 2) Act, 2024, and consult the Direct Tax Vivad Se Vishwas Rules, 2024. For accessing the forms, they can visit the Income Tax Department’s e-filing portal at www.incometax.gov.in.
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