To clear all doubts on Vivad Se Vishwas Scheme 2024 Income Tax dept releases FAQ; Know how to get waiver of penalty and interest

The Ministry of Finance has published certain clarifications and frequently asked questions (FAQs) about Direct Tax Vivad Se Vishwas Scheme 2024. This was announced in Budget 2024. The scheme aims to provide a dispute resolution opportunity to taxpayers for pending income tax litigations by forgiving all pending penalties and interest amount. However, this waiver of penalty and interest is conditional. To get the relief you must submit the appropriate form and also deposit the disputed tax demand amount by the specified date.

“In order to facilitate various queries raised by the stakeholders following the enactment of the Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024, the Central Board of Direct Taxes (CBDT) has today issued a Guidance Note in the form of Frequently Asked Questions (FAQs). This note is designed to provide clarity and assist taxpayers in better understanding the provisions of the Scheme,” said the Ministry of Finance in a press release dated October 15, 2024 at 7.56PM.

Which type of tax appeals are covered under Direct Tax Vivad Se Vishwas 2024 Scheme

According to an income tax department circular dated October 15, 2024 under section 89 of the Direct Tax Vivad Se Vishwas Scheme, 2024, the following appellants are eligible: ● A person in whose case an appeal or a writ petition (WP) or special leave petition (SLP) has been filed either by him or by the income tax authority or by both, before an appellate forum and such appeal or petition is pending as on the specified date i.e. July 22, 2024; or
● A person who has filed his objections before the Dispute Resolution Panel (DRP) under section 144C and the DRP has not issued any direction on or before July 22, 2024; or
● A person in whose case the DRP has issued direction under section 144C(5) and the AO has not completed the assessment under section 144C(13) on or before July 22, 2024.
● A person who has filed an application for revision under section 264 of the Act and such application is pending as on July 22, 2024.

Disputed Tax amount to be deposited by following this timeline for applying for Direct Tax Vivad Se Vishwas 2024 Scheme

According to the tax department’s circular here’s a table explaining how much of the disputed amount you need to deposit for applying for Direct Tax Vivad Se Vishwas 2024 Scheme:

Source: Income tax department circular dated October 15, 2024.As per the circular certain additional details about payment of the disputed tax amount are as follows:

• Where an appeal/writ petition/SLP is filed by the income tax authority on any disputed issue, the amount payable shall be 50% of the amount payable specified in the Table above.
• Where an appeal is filed by the appellant before the Commissioner (Appeals)/Joint Commissioner (Appeals) or objections arc filed before the Dispute Resolution Panel on any issue on which he has already got a decision in his favour from the ITAT (where the decision on such issue is not reversed by the High Court or the Supreme Court) or the High Court (where the decision on such issue is not reversed by the Supreme Court), the amount payable shall be 50% of the amount payable specified in the Table above.
• Where an appeal is filed by the appellant on any issue before the ITAT on which he has already got a decision in his favour from the high Court (where the decision on such issue is not reversed by the Supreme Court), the amount payable shall be 50% of the amount payable specified in the Table above.

Source: EY India Budget 2024 highlights

“On October 15, 2024 the income tax department clarified that If both appeal covering disputed tax and appeal against penalty levied on such disputed tax are pending, applicant would be required to pay relevant percentage of disputed tax only and not penalty. Also, it is clarified that interest and penalty will be waived only in respect of the issue which is disputed in appeal and for which declaration is filed. For the undisputed issue, the tax, interest and penalty shall be payable. If a dispute has been settled under this Scheme, the immunity from prosecution with respect to that dispute will be granted,” says Mihir Tanna, Associate Director- direct tax, S.K Patodia & Associates LLP, a CA firm.

What are the various timelines specified in the Direct Tax Vivad Se Vishwas Scheme?

According to the circular here are the timelines to follow:

• Declaration and Undertaking shall be filed by tax payer in Form- I on or before December 31, 2024 to keep the amount payable on the lower threshold. In case of filing the declaration and undertaking beyond December 31, 2024, the amount payable will increase as specified in rates Table above.
• The Designated Authority shall issue Form -2 within a period of fifteen days from the date of receipt of the declaration to determine the amount payable by the taxpayer.
• The tax-payer shall pay the amount as determined in Form-2 within a period of fifteen days from the date of receipt of the certificate, and shall intimate the details of such payment in Form-3
• Upon receipt of Form-3, Designated Authority shall pass an order in FormA stating that the taxpayer has paid the full and final amount.

Which cases are not covered under Direct Tax Vivad Se Vishwas 2024 Scheme

According to the income tax department circular, the Direct Tax Vivad Se Vishwas 2024 Scheme will not apply in respect of the following:

● Relating to an assessment year in respect of which an assessment has been made under section 143(3)/144/147/153A/153C on the basis of search initiated under section 132/132A;
● Relating to an assessment year in respect of which prosecution has been instituted on or before the date of filing of declaration;
● Relating to any undisclosed income from a source located outside India or undisclosed asset located outside India;
● Relating to an assessment or reassessment made on the basis of information received under an agreement referred to in section 90 or section 90A, if it related to any tax arrear.