Income Tax Department Extends Deadline to pay a lower amount of tax to apply for Vivad Se Vishwas Scheme 2024

Income tax relief: Deadline of Vivad Se Vishwas Scheme extended, taxpayers get more time to pay a lower amount of tax to settle dispute

The Income Tax Department has extended the deadline of Vivad Se Vishwas Scheme 2024 from December 31, 2024 to January 31, 2025. This scheme helps taxpayers to settle an ongoing dispute by paying a lower amount of income tax. Had the deadline been not extended the taxpayers would have been required to pay 10% tax extra for applying for the scheme. Deadline extension comes as a big relief for taxpayers who are yet to apply for Vivad Se Vishwas Scheme 2024.

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“The Central Board of Direct Taxes (CBDT), in exercise of its powers under sub-section (2) of section 97 of the Direct Tax Vivad Se Vishwas Scheme, 2024 (‘the Scheme’) extends the due date for determining amount payable as per column (3) of the Table specified in section 90 Of the Scheme from 31 December, 2024 to 31 January, 2025,” The Income Tax Department said in a circular dated December 30, 2024.

From February 1, 2025, 10% extra tax is payable to apply for Vivad Se Vishwas Scheme 2024
"Accordingly, notwithstanding anything contained in the Direct Tax Vivad Se Vishwas Scheme, Rules or Guidance Note of 2024, in such cases where declaration is filed on or before 31 January, 2025, amount payable shall be determined as per column (3) of the Table specified in section 90 of the Scheme, and where declaration is filed on or after 01 February, 2025 , Amount payable shall be determined as per column (4) of the said Table,” said The Income Tax Department in the circular.

Mihir Tanna, associate director, S.K Patodia LLP, says, “As some taxpayers are still in the process of filing applications under VSV, extension of 31 days will provide great relief to calculate the impact under VSV and file applications to resolve income tax disputes under appeal, if it is more beneficial. There are certain ambiguities in the provisions of VSV and CBDT has already issued 2 sets of FAQs (last on 16th December). Extension will help taxpayers to understand the scheme and apply for the same, if it is more beneficial (specifically to buy peace of mind and to reduce expected cost of litigation).”

Serial Number	Nature of tax arrears	Amount payable where declaration made on or before January 31, 2025	Amount payable where declaration made on or after February 1, 2025& before last date
1.	Tax arrears include disputed tax, interest, penalty (New appellant)	100% of disputed tax	110% of disputed tax
2.	Tax arrears include disputed tax, interest, penalty (Old appellant)	110% of disputed tax	120% of disputed tax
3.	Tax arrears related to disputed interest/penalty/fee (New appellant)	25% of disputed interest/penalty/fee	30% of disputed interest/penalty/fee
4.	Tax arrears related to disputed interest/penalty/fee (Old appellant)	30% of disputed interest/penalty/fee	35% of disputed interest/penalty/fee

Chartered Accoutant Kushal Soni, says, "This extension provides relief to the taxpayers who are still in the process of evaluating whether to opt for the scheme or not. Now, taxpayers can file Form 1 declaration for settlement of dispute till 31 Jan 2025. However, this extension is not for those cases where Form 2 has been issued where Form 1 has been already filed by the taxpayer. Payment of disputed tax needs to be made within 15 days from the date of receipt of Form 2.

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Chartered Accountant Himank Singla says,

The direct Tax Vivad Se Vishwas Scheme 2024 announced in Budget 2024 provides an opportunity to taxpayers for settling their pending tax disputes with the Income Tax Department. Under this scheme, you need to pay the disputed amount of tax as well as a specified percentage on this disputed tax amount along with disputed tax amount. Once the specified tax amount is deposited to the government along with the application form, the income tax department will waive off all the additional penalties, penal interest amount and close the tax dispute case.