The Vivad se Vishwas scheme will come into effect from October 1, giving taxpayers a chance to resolve certain ongoing tax litigation cases.
“The central government hereby appoints the 1st day of October, 2024 as the date on which the Direct Tax Vivad Se Vishwas Scheme, 2024 shall come into force,” said a notification by the Finance Ministry on Friday. This is the second Vivad se Vishwas scheme to be launched following a good response to the first scheme which was introduced in 2020. The second version of the scheme was announced by Union Finance Minister Nirmala Sitharaman had said in the Union Budget 2024-25.
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“The pendency of litigation at various levels has been on the rise due to larger number of cases going for appeal than the number of disposals. Keeping in view the success of the previous Vivaad Se Vishwas Act, 2020 and the mounting pendency of appeals at CIT(A) level, introduction of a Direct Tax Vivad se Vishwas Scheme, 2024 is proposed with the objective of providing a mechanism of settlement of disputed issues, thereby reducing litigation without much cost to the exchequer,” said the Explanatory Memorandum to the Finance Act.
The scheme would allow for settling of disputes for cases pending as on July 22 in various courts. These can include appeals, Writ petitions, special leave petitions relating to disputed tax, interest, penalty or fee and is pending before the appellate authorities, High Court, Supreme Court, objections filed before the Dipute Resolution Panel and revision applications filed before the income tax commissioner.
“It has been the endeavour of the Central Board of Direct Taxes to provide expeditious disposal of appeals by appellate authorities under its administrative control,” said the memorandum.
Around 27 million direct tax demands totalling about Rs 35 lakh crore are pending in various courts.
Karishma R. Phatarphekar, Partner, Deloitte India said that with tax payment rates set to increase by 10% starting January 1, 2025, it is crucial for companies to evaluate their pending income tax litigations from both a cost-benefit standpoint and a broader non-tax perspective. “The Rules and Forms for VSV 2.0 are also announced. Given the limited time window, an informed decision on opting for the scheme should be made promptly,” she noted.
As many as 1 lakh taxpayers availed of the scheme and the Centre earned taxes of about Rs 75,000 crore through the first Vivad se Vishwas scheme.