Comprehensive Guide to Vivad Se Vishwas Scheme 2024: Insights from Circular No. 12/2024

CA Varun Gupta , Last updated: 25 December 2024
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The Vivad Se Vishwas Scheme 2.0 is a government initiative designed to address and resolve pending income tax disputes. Under this scheme, eligible taxpayers have the opportunity to settle their outstanding tax liabilities by paying a predetermined percentage of the dues. The scheme will be officially implemented starting October 1, 2024.

The government categorizes applicants into two groups as follows:

Old Applicants: Those with pending appeals at the same forum on or before January 31, 2020.
New Applicants: Those who filed appeals after January 31, 2020, but on or before July 22, 2024.

As per Circular No. 12 of 2024, dated October 15, 2024, if an assessee intends to apply for the Vivad Se Vishwas Scheme (VSVS), they must submit their application before December 31, 2024. Applications submitted before this date will result in a lower payable amount compared to those made after December 31, 2024. While there is no restriction on applying for VSVS after December 31, 2024, the amount payable will increase after this deadline.

Comprehensive Guide to Vivad Se Vishwas Scheme 2024: Insights from Circular No. 12/2024

Payable amount

The amount to be paid by taxpayers opting to settle their disputes is:

(a) Aggregate amount of disputed tax, interest on such disputed tax and penalty levied or leviable on such disputed tax:

Nature of tax arrear	The amount payable on or before 31 December 2024	The amount payable on or after 1 January 2025 but on or before the last date
i. Appeal filed after 31 January 2020 but on or before 22 July 2024	i. 100% of disputed tax	i. 110% of disputed tax
ii. Appeal pending at same forum on or before 31 January 2020	ii. 110% of disputed tax	ii. 120% of disputed tax

(b) Disputed interest/ penalty/fee: i. Appeal filed after 31 January 2020 but on or before 22 July 2024

Nature of tax arrear	The amount payable on or before 31 December 2024	The amount payable on or after 1 January 2025 but on or before the last date
i. Appeal filed after 31 January 2020 but on or before 22 July 2024	i. 25% of disputed interest/ penalty/fee	i. 30% of disputed interest/ penalty/fee
ii. Appeal pending at same forum on or before 31 January 2020	ii.30% of disputed interest/penalty/fee	ii. 35% of disputed interest/penalty/fee

Where the taxpayer's Appeal related to an issue, which has been decided in its favour by the Income Tax Appellate Tribunal/High Court (and not reversed by the High Court or the Supreme Court, as the case may be).

The Appeal has been filed by tax authorities.

Eligibility Criteria to Opt for the DTVSV Scheme, 2024

To be eligible for the scheme, taxpayers must meet one of the following criteria as on July 22, 2024:
Taxpayers with pending appeals before the Commissioner of Income Tax (Appeals) (CIT(A)), Income Tax Appellate Tribunal (ITAT), High Court, or Supreme Court.
Taxpayers who have filed objections with the Dispute Resolution Panel (DRP) under Section 144C of the Income Tax Act and the DRP have not yet issued directions to the Assessing Officer (AO).
Taxpayers where the DRP have issued directions to the AO, but the AO has not issued a final assessment order.
Taxpayers with pending revision applications under Section 264 of the Income-tax Act.

Not eligible cases

Assessments made under sections 143(3), 144, 147, 153A, or 153C based on a search initiated under sections 132 or 132A (i.e., search and seizure).
Protection has been instituted on or before the date of filing of declaration under form -1
Undisclosed income from a source or undisclosed assessments made outside India.
Assessments made based on information received under agreements referred to in sections 90 or 90A (pertaining to foreign income).
Cases falling under the COFEPOSA Act, 1974; UAPA Act, 1967; NDPS Act, 1985; PBPT Act, 1988; PC Act, 1988; PMLA 2002, etc., are excluded from the Scheme.

Notified Forms

The government has notified four forms for the purpose of Vivad Se Vishwas Scheme 2.0. They are as follows:

Form-1: Declaration and Undertaking Form to be filed by the declarant.
Form-2: Certificate to be issued by the Designated Authority.Timeline for Form-2: It must be issued by the Designated Authority within 15 days of the submission of Form-1.
Form-3: Intimation of Payment by the Declarant.Timeline for Form-3: Payment must be made within 15 days of receiving Form-2, and Form-3 must be submitted as payment intimation.
Form-4: Order for Full and Final Settlement of Tax Arrears by the Designated Authority.Form-4 is issued after receiving Form-3, confirming the full settlement.

The DTVSV Scheme stipulates that Form-1 must be submitted separately for each dispute. However, if both the appellant and the income tax authority have filed an appeal concerning the same order, a single Form-1 should be submitted in that instance.

Payment notification is to be completed using Form-3, which must be submitted to the Designated Authority along with proof of withdrawal of the appeal, objection, application, writ petition, special leave petition, or claim. Forms 1 and 3 are required to be submitted electronically by the declarant.

Important Points to Note

Request for Withdrawal of Case: A request for withdrawal of the case must be enclosed.

Case Scenarios

Case Scenario	VSVS Applicable or Not
1. No appeal, but the assessee has filed a waiver application	Not applicable.
2. JCIT (Appeals)/CIT (Appeals) has issued an enhancement notice	Yes, VSVS is applicable.
3. Refund of taxes paid or setoff of refund with tax liability	Not allowed. Refund cannot be set off against tax liability, and in no circumstances will any refund be allowed once paid.
4. TDS/TCS cases	Allowed. This includes appeals related to TDS and TCS deductions. Interest on appeal dues due to delay in filing of appeal is also allowed. Additionally, deductions under sections 40A(i) and 40A(ia) are allowed if not claimed earlier.
5. Rejection of 12AA registration	Not applicable.
6. Set aside matters to AO	Not applicable. A set-aside matter to the AO is not considered an appeal pending.
7. Two appeals for the same year	Yes, applicable. For example, one filed by the assessee and another by the department.
8. HC/SC yet to admit the case	Yes, applicable.
9. Cross Objection	Yes, applicable.
10. Miscellaneous application	Not applicable.
11. Stay Order by HC/SC on enforceability of the order passed by AO	Not applicable.

This article was becoming quite lengthy, so I have written a separate article on the same topic, which covers Circular No. 19/2024, dated December 16, 2024, and will be updated soon.

While there are many points to consider under the VSVS, I have focused on the topics that I believe are most important in this article.

The author can also be reached at varunmukeshgupta96@gmail.com.

Attached File : 4142123_52902_circular_12_2024.pdf