Vivad Se Vishwas Scheme: Know How Taxpayers Can Make Use Of This Provision

The Vivad Se Vishwas Scheme was announced earlier this year in the Union Budget 2024-25. The scheme came into effect on October 1, 2024. The scheme aims to reduce pending income tax litigation, generate timely revenue for the government and simplify the long-drawn litigation process. Taxpayers can settle disputes through the scheme on or before December 31, 2024.

How The Direct Tax Vivad Se Vishwas Scheme Works

As a part of the scheme, taxpayers have to pay the disputed amount of tax and a specified percentage of the disputed tax amount. Once the specified tax amount and the application form are received by the government the income tax department waives off all the additional penalties and penal interest and closes the case. However, if the taxpayer submits the form and deposits the amount on or after January 1, 2025, he or she will need to pay a higher amount.

Eligibility For Applying For Vivad Se Vishwas Scheme

An application can be filed in four scenarios by taxpayers according to a Guidance Note issued by the Central Board of Direct Taxes earlier this year in October:

• If an appeal or a writ petition (WP) or special leave petition (SLP) has been filed by the taxpayer or the income tax authority or by both, before an appellate forum and if the appeal or petition is pending as of July 22, 2024

• If the taxpayer has filed 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, 2024

• If the DRP has issued direction but the Assessing Officer (AO) has not completed the assessment on or before July 22, 2024

• If an application for revision has been filed under section 264 of the Income Tax Act and such an application is pending as of July 22, 2024

Which Forms Are Required To Apply For Direct Tax Vivad Se Vishwas Scheme

As per the guidance note issued by the CBDT, four forms are needed to apply for the resolution of direct tax-related disputes through the scheme:

• Form-1

  This form is used for filing a declaration and undertaking by the declarant

• Form 2

  This form is for the certificate to be issued by the designated authority

• Form-3

  This form is used for the intimation of payment by the declarant

• Form-4

  This form details the full and final settlement of outstanding tax by the designated authority

Taxpayers must note that Form 1 and Form 3 need to be submitted electronically by the declarant on the e-filing portal of the Income Tax Department. Following the settlement of the dispute, the income tax department will issue a Form-4 which details the full and final settlement of the outstanding tax.