Vivad se Vishwas Scheme 2.0 (VSVS II) was introduced on the latest Budget 2024 by FM Nirmala Sitharaman. This is a Voluntary Settlement Scheme, a very important opportunity for taxpayers to get relief from the vexatious litigation process.
If a person has a pending appeal or is stuck with a lengthy pending litigation or tax dispute, this scheme is beneficial, especially for them. The Scheme aims to settle the pending contractual disputes of government and government undertakings. It generally covers disputes related to direct taxes, such as income tax and corporate tax. The date of enforcement of the scheme has yet to be determined.
Background of Vivad Se Vishwas Scheme
Vivad Se Vishwas Scheme 2020 was introduced to resolve pending tax disputes and settle tax arrears efficiently. The scheme made providing relief easier for MSMEs during the COVID-19 pandemic. The taxpayers well received the scheme. The scheme resolved over 1.13 crore disputes with revenue generation of Rs 75,788 crore. However, VSVS I ended, as it was a limited-time effort by the government to resolve the tax disputes.
Again, the situation has arisen, and the growing number of tax disputes has led to various pending litigation and unpaid taxes. After the success of VSVS I, the government decided to reintroduce the scheme, i.e., VSVS II, with a similar aim with some updates and refinement by analyzing the outcomes from VSVS I.
Eligible Applicants Top of Form
If any of the following scenarios apply to your tax case as of July 22, 2024, you are eligible to apply for the Vivad Se Vishwas Scheme II;
- If an appeal, a writ petition, or Special Leave Petition (SLP) is pending before an appellate forum and the process is still ongoing on July 22, 2024
- If Pending Objections with the Dispute Resolution Panel (DRP) and the panel has not yet given a decision by July 22, 2024.
- If DRP has already given its directions (under section 114C (5)), but the Assessing Officer (has not finished the assessment by July 22, 2024.
- If your application is for a revision of your tax assessment under Section 264 of the Income Tax Act is still pending as of July 22, 2024.
Ineligible Cases for Vivad se Vishwas Scheme
Some of the cases not covered by Vivad se Vishwas Scheme II are;
- Search and seizure
- Cases where Prosecution has started
- Undisclosed Income/ Asset Located Overseas
- Benami Property Transactions Act
- Prevention of Corruption Act
- Proceedings under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, Unlawful Activities (Prevention) Act
- Prevention of Money Laundering Act
Amount of Disputed Tax Payable by the Declarant
| Appeal Proceedings | The amount payable on or before 31ST December | Amount payable after 1st January 2025 but on or specified date (yet to be notified) |
| Appeal filed after 31st January,2020 but before 22ND July,2024 | 100% of disputed tax | 110% of disputed tax |
| Appeal filed after 31st January 2020 and pending at the same appellate forum | 110% of disputed tax | 120% of disputed tax |
| Appeal filed after 31st January 2020 but before 22ND July 2024 in relation to disputed interest/ penalty/ fee | 25% of the disputed interest/penalty/ fee | 30% of disputed interest/ penalty/fee |
| Appeal filed before 31st January 2020 and pending at the same appellate forum in relation to disputed interest/ penalty/ fee | 30% of disputed interest/ penalty/fee | 35% of disputed interest/ penalty/fee |
Amount Payable by the Declarant in Other Scenarios
| Appeal or writ or SLP filed by Income Tax authority on any disputed issue before an appellate forum | Appeal filed before CIT(A) or objection filed before DRP by the appellant, on any issue on which an assessee has got the decision in his favour from ITAT |
| Appeal filed after 31st January,2020 but before 22nd July, 2024 | 50% of disputed tax (up to 31st December 2024) 55% of disputed tax (After 1st January 2025) |
| Appeal filed after 31st January 2020 but before 22nd July, 2024 | 50% of disputed tax (up to 31st December 2024) 55% of the disputed tax (After 1st January 2025) |
| Appeal filed before 31st January 2020 | 55% of disputed tax (up to 31st December, 2024) 60% of disputed tax (After January 1, 2025) |
| Appeal filed after 31st January 2020 but before 22nd July 2024 in respect to disputed interest/penalty/fee. | 12.5% of disputed interest/ penalty/ fee (Up to 31st December 2024) 15% of the disputed interest/penalty/ fee (After 1st January, 2025) |
| Appeal filed before 31st January 2020 but before 22nd July 2024 in respect to disputed interest/penalty/fee. | 15% of disputed interest/ penalty/ fee (Up to 31st December 2024) 17.5% of the disputed interest/penalty/ fee (After 1st January, 2025 |
Process Required for Relief
The process required for relief are:
- Declaration must be filed by a taxpayer filling out the specified form.
- The taxpayer needs to furnish an undertaking waiving their right, directly or indirectly, to seek or pursue any remedy or claim concerning the tax arrears under any law.
- The designated authority will determine the amount the taxpayer owes within 15 days.
- Within 15 days, taxpayers should pay the amount and submit proof of payment.
- The authority will then pass an order, which will be final.
Time Frame to Opt for the Scheme
Know about the time frame to opt for the scheme:
- Filing of the Declaration: Yet to be notified
- Determination of the amount payable and grant of certification: 15 days from the date of declaration
- Payment of amount determined and intimate to a designated officer about the payment: Within 15 days of certification
- The period for passing the order has yet to be determined.
Things to Consider
- Complete immunity will be provided to you. This means no appeal/action/proceedings will be initiated against the benefit you received from the Vivad Se Vishwas Scheme II.
- If the amount you paid exceeds the required amount payable under the Vivas Se Vishwas Scheme, then you will get a refund for that extra amount.
Conclusion
With the rise of tax disputes, the introduction of the Vivad Se Vishwas Scheme 2.0 is a significant opportunity for taxpayers to avoid lengthy litigation and efficiently resolve disputes. The scheme allows taxpayers to settle disputes by paying a percentage of the disputed tax, with different rates depending on when the appeal was filed. Immunity is provided from further proceedings, and if you pay extra, you get a refund.
End the stress of lingering tax disputes by visiting our website Taxeye and seize the benefits of the Vivad se Vishwas Scheme 2.0 for hassle-free resolution.
Frequently Asked Question
What is the Vivad Se Vishwas Scheme 2024?
It is a Voluntary Settlement Scheme introduced to resolve pending tax disputes and settle arrears efficiently.
When will VSVS II be enforced?
The date of enforcement has yet to be determined.
Who is eligible to apply for Vivad se Vishwas Scheme 2.0?
Taxpayers with pending appeals, writ petitions, or Special Leave Petitions (SLPs) as of July 22, 2024, or those with pending objections with the DRP or revision applications under section 264 of the Income-tax Act are eligible.
What kind of immunity does VSVS 2.0 provide?
Complete immunity from further appeals, actions, or proceedings related to the settled disputes.
How does VSVS II benefit MSMEs?
It provides a streamlined resolution process, potentially lowering the tax burden and reducing litigation costs.
How does one apply for the scheme?
Login to the IT portal.
Select the Vivad Se Vishwas tab.
Submit Form DTVSV and other required forms/documents.
Make the payment as specified and file it within 15 days.
Where can I get more information about VSVS II?
Check the official notifications and circulars from the Income Tax Department or consult with a tax professional.