Income tax dispute: Vivad Se Vishwas Scheme 2024 application deadline notified by Govt; apply now to get waiver of interest and penalty
The Ministry of Finance has notified April 30, 2025, as the deadline to apply for Direct Tax Vivad Se Vishwas Scheme, 2024. Under the Direct Tax Vivad Se Vishwas Scheme 2024 you need to pay the disputed amount of tax as well as a specified percentage on this 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.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
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“In exercise of the powers conferred by clause (l) of sub-section (1) of section 89 of the Finance (No. 2) Act, 2024 (15 of 2024), the Central Government hereby notifies under the Direct Tax Vivad se Vishwas Scheme, 2024, the 30th day of April, 2025 as the last date, on or before which a declaration in respect of tax arrear shall be filed by the declarant to the designated authority, in accordance with the provisions of section 90 of the said Act,” said Ministry of Finance in a notification dated April 8, 2025.
Only these tax appeals cases are considered under Vivad Se Vishwas Scheme 2024
According to EY’s analysis document, Appeals filed after 22 July 2024 shall, for the purposes of VSV 2.0, be considered as appeals pending as on 22 July 2024, if such appeals:Are in respect of orders passed on or before 22 July 2024 for which the time to file an appeal was available as on 22 July 2024. Were filed within the stipulated time as applicable for filing such appeal. Were filed without any application for condonation of delay. Disputed tax would be calculated at the tax payable by the taxpayer if such appeal was to be decided against the taxpayer.Sandeep Bhalla, Partner, Dhruva Advisors, says the government should extend the eligibility date which is July 22, 2024.
"Based on the success of VSV Scheme, 2020 which received a very encouraging response from the taxpayers and also garnered substantial revenue for the government, Direct Tax Vivad Se Vishwas Scheme, 2024 was reintroduced with a goal to provide taxpayers a one-time opportunity to settle tax disputes without litigation. The scheme aims to reduce income tax litigation by allowing taxpayers to settle paying the principal tax amount while enjoying waivers on interest, penalty and prosecution. While 1,46,701 disputes were settled, under the VSV Scheme 2020, similar response has not been received on the VSV 2024 particularly considering the non-disposal of appeals at Commissioner level. Further, there would be substantial increase in pendency considering the orders passed by the tax office by March 2025. Thus, instead of extending the deadline for filing the declaration, the option of extending the eligibility date for pendency (currently 22 July 2024) could be considered. This would give time and opportunity to taxpayer to settled even the new disputes that have come up," says Bhalla.
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Eligibility conditions for applying for Direct Tax Vivad Se Vishwas 2024 Scheme?
The following taxpayers 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 July 22, 2024A person who has filed his objections before the Dispute Resolution Panel (DRP) under section 144C of the Income Tax Act, and the DRP has not issued any direction on or before July 22, 2024A person in whose case the DRP has issued direction under section 144C(5) and the Assessing Officer (AO) has not completed the assessment under section 144C(13) on or before July 22, 2024A person who has filed an application for revision under section 264 of the Act and such application is pending as on July 22, 2024.According to Gaurav Makhijani, Associate Partner and Head of Tax (North India and Gujarat) at Roedl and Partner India, "The Vivad Se Vishwas Scheme 2024 allows eligible taxpayers to resolve pending tax disputes with the authorities. A taxpayer can apply for this scheme if the matter is pending before any appellate authority (e.g., Commissioner (Appeals), Tribunal, High Court, or Supreme Court) as of 22 July 2024. Additionally, if the time limit for filing an appeal was available as of 22 July 2024 and the taxpayer filed the appeal within the prescribed time, they are also eligible to apply. The government has notified that taxpayers must file a declaration (Form 1) on or before 30 April 2025 to benefit from the scheme. Few specific cases are not eligible for scheme such as cases of search and seizure."
Chartered Accountant Ashish Niraj, Partner, A S N & Company, says: “ As the last day for Filing declaration under Vivad Se Vishwas Scheme 2024 , has been notified as 30th April 2025, the taxpayers who wish to avail the benefit must submit it latest by that date. It’s a golden opportunity to settle eligible disputes. First Part of Vivad se Vishvas Scheme was very successful and by filing the declaration timely one can get benefits of lower interest and penalty etc, and must be availed. There is huge pile up of cases at appeal and high court levels and the scheme is resolving litigations immensely.”
The Vivad Se Vishwas Scheme works like this: Say you have a pending tax dispute with the income tax department. The income tax department contests that your income is Rs 150 and on this income you have a tax liability of Rs 25. But you disagree with this and are of the view that the income is Rs 100 and tax liability is Rs 10. This dispute reached the courts but no final judgment came yet. So now if you want to settle this income tax dispute under Vivad Se Vishwas Scheme, then you need to pay Rs 15 (Rs 25-Rs 10) and a specified percentage on this disputed tax amount. The penalty and penal interest under section 220 will get waived off if the taxpayer’s application is approved under the Direct Tax Vivad Se Vishwas Scheme 2024.
Table showing the percentage amount to pay for applying for Direct Tax Vivad Se Vishwas Scheme 2024
Serial Number
Nature of tax arrears
Amount payable where declaration made on or before December 31, 2024
Amount payable where declaration made on or after January 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
Source: Source: Income Tax Department circular dated October 15, 2024.
What should taxpayers do now to apply for Vivad Se Vishawas scheme on or before the deadline of April 30, 2025?
As per Chartered Accountant Mayank Mohanka, Partner, SM Mohanka & Associates & Founder- TaxAaram.com, "CBDT has notified 30.04.2025 as the last date, on or before which an applicant can opt for settling its income tax appeal, pending as on 22.7.2024, under the VsV 2024, by filing declaration in prescribed Form 1. However, for such applicants, the amount of tax payable will be 110%."Mohanka explains using an example. He says: consider an applicant say a company, whose income tax appeal was pending as on 22.7.2024 before CIT(Appeals) in respect of additions of Rs 10 lakhs in the assessment order. Now this company can file its Declaration in prescribed Form 1 on or before the last date viz. 30.4.2025, and if it's application is accepted by designated authority, then it can settle its tax arrears by paying 110% of the disputed tax. In this case, it will come out around Rs 2,76,870 (assuming the company has opted for new regime in which effective tax rate is 25.17% and principal income tax due on such additions of 10 lakhs is Rs 2,51,700).
Mohanka adds: "So, in this example, the company has to file its Declaration in Form 1 on or before the last notified date of 30.4.2025, to avail the benefit of interest & Penalty waiver under the VsV Scheme 2024. Suppose the company, file its Application in Form 1 on 30.4.2025. The designated authority shall within 15 days of receipt of such declaration, (15.5.2025), grant a Certificate in Form 2 determining the amount of tax payable. The company shall pay such tax amount (in this case 110% i.e. Rs 2,76,870) within 15 days of receipt of Form 2 (by 30.5.2025) by filing Form 3. The designated tax authority shall pass an Order in Form 4, confirming the payment of tax by the company."
Makhijani from Roedl and Partner India explains: "Any taxpayer with a pending appeal (pending from time after 31 January 2020) will need to pay 110% of the disputed tax to settle the matter. In such cases, the taxpayer will be granted immunity from interest and penalty, and the case will be closed. For appeals pending from time before 31 January 2020, the taxpayer will be required to pay 120% of the disputed tax. Even interest or penalty disputes can be settled by paying 30% of the disputed interest/penalty if the appeal for interest/penalty is pending after 31 January 2020, or 35% of the disputed interest/penalty if the appeal is pending before 31 January 2020. The case will be closed. Interesting to note is that, if a taxpayer has received a favorable order from a higher court on the same issue that is pending before the appellate authorities (i.e. for same issue for which settlement is now sought), the amount payable under the scheme will be reduced by half. For example, for disputes where 110% of the disputed tax was originally payable, the new amount will be 55%. Similarly, for other categories, the payable amount will be halved."
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This story originally appeared on: India Times - Author:Faqs of Insurances
