Direct Tax Vivad Se Vishwas Scheme (DTVSV), 2024: An Overview
Introduction
The Direct Tax Vivad Se Vishwas Scheme (DTVSV), 2024 aims to resolve pending income tax disputes that are currently under appeal. With an increasing number of cases in litigation compared to those being resolved, this scheme builds upon the success of the previous Vivad Se Vishwas Act of 2020. The DTVSV seeks to create an efficient mechanism for settling disputed issues, thereby minimizing litigation costs for taxpayers.
Applicability
The DTVSV applies to various disputes and appeals, including writs, that are pending as of July 22, 2024. The specific authorities involved include:
- Supreme Court
- High Courts
- Income Tax Appellate Tribunal (ITAT)
- Commissioners/Joint Commissioners (Appeals)
- Disputed Resolution Panel (DRP), or cases where DRP orders have been issued but final assessment is awaited
- Revision applications filed under Section 264 of the Income Tax Act, 1961
Payment Structure
Under the DTVSV, the amount payable varies based on the status of the appellant and the nature of the tax arrears. Key points are as follows:
| Nature of Tax Arrear | Amount Payable (by Dec 31, 2024) | Amount Payable (from Jan 1, 2025) |
|---|---|---|
| New Appellant* | 100% of Disputed Tax | 110% of Disputed Tax |
| Old Appellant** | 110% of Disputed Tax | 120% of Disputed Tax |
| Disputed Interest/Penalty (New Appellant) | 25% of Disputed Amount | 30% of Disputed Amount |
| Disputed Interest/Penalty (Old Appellant) | 30% of Disputed Amount | 35% of Disputed Amount |
*New Appellant: An appellant who filed an appeal after January 31, 2020.
**Old Appellant: An appellant who filed an appeal on or before January 31, 2020.
In certain cases, the amount payable is reduced to 50% if the appeal is filed by the Income Tax Authority or if the appellant has previously received a favorable decision from ITAT or higher courts.
Exclusions from the Scheme
The DTVSV is not applicable in the following scenarios:
- Assessments related to searches initiated under Sections 132 or 132A of the Income Tax Act
- Cases where prosecution has commenced before the declaration is filed
- Assessments concerning undisclosed income or foreign assets
Process for DTVSV, 2024
To initiate the DTVSV, declarants must follow a specific process:
- Declaration Filing: The declarant files a declaration in Form 1 before the designated authority, providing details about the order passed, tax arrears, and the amount payable.
- Deemed Withdrawal: Once the declaration is filed, any pending appeals related to the disputed tax will be deemed withdrawn upon issuance of a certificate (Form 2) by the designated authority within 15 days.
- Payment Intimation: After receiving Form 2, the declarant must file Form 3 to notify the designated authority of the payment.
- Final Settlement: The designated authority will issue a full and final settlement order in Form 4, concluding the matter.
- No Further Proceedings: Once settled, no further proceedings or penalties can be initiated concerning the tax arrears under the Income Tax Act.
Application Process for DTVSV, 2024
To apply under the DTVSV scheme, follow these steps:
- Review Disputes: Confirm that your dispute is eligible for the scheme.
- Access E-Filing Portal: Visit the Income Tax Department’s e-filing portal.
- Select Form 1: Under the “e-file” tab, choose the option for individuals not dependent on any source of income and select Form 1.
- Fill Out Details: Complete the required information across several sections, including general details, dispute information, and tax arrears.
- Select Relevant Schedules: Depending on your dispute type, select the appropriate schedules (e.g., Schedule A for disputed tax).
- Verification and Submission: Verify the form using OTP and submit it. An acknowledgment receipt will be generated upon successful submission.
Conclusion
The Direct Tax Vivad Se Vishwas Scheme, 2024 offers a structured approach for resolving pending income tax disputes, significantly reducing litigation burdens for taxpayers. By understanding its provisions and processes, taxpayers can take advantage of this opportunity to settle disputes effectively and efficiently.
