Vivad Se Vishwas Scheme 2024: CBDT sets new deadline on Jan 31, 2025; check details for settling tax disputes

New deadline for  Vivad Se Vishwas Scheme: The deadline for determining the payable amount under the Direct Tax Vivad Se Vishwas Scheme 2024 has been extended by the Central Board of Direct Taxes (CBDT). Taxpayers now have until January 31, 2025, to submit their declarations and resolve disputes at reduced tax rates. Effective February 1, 2025, individuals participating in the scheme will be required to pay additional fees based on updated rates.

During the Budget 2024 address, Finance Minister Nirmala Sitharaman introduced the Vivad Se Vishwas Scheme to aid taxpayers in resolving tax disputes with the income tax department. This initiative enables taxpayers to settle their unresolved tax obligations by remitting the contested sum along with a specified percentage.

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By availing of this scheme, taxpayers can resolve their disputes, thus preempting any further penalties. The aim of Vivad Se Vishwas 2.0 is to decrease the number of litigations and resolve about 2.7 crore direct tax disputes worth roughly Rs 35 lakh crore.

To benefit from reduced settlement costs, taxpayers are required to complete their payments and submit the necessary application form by January 31, 2024, under the Vivad Se Vishwas Scheme. This scheme entails taxpayers paying the disputed tax amount along with a specified percentage, leading the income tax department to waive all additional penalties, penal interest, and close the tax dispute case upon receipt of the specified amount and completed form. However, this opportunity expires on January 31, 2024, with applications submitted on or after February 1, 2025, not being eligible for the reduced tax rates.

Taxpayers who submit a declaration by January 31, 2024, must settle 100% of the disputed tax demand, with any interest and penalties being waived. For declarations made on or after January 1, 2025, taxpayers are obligated to pay 110% of the disputed tax demand.

Charges on Jan 31, 2025 vs Feb 1, 2025

As per the Income Tax department notice, the penalty charges are as follows:

Tax arrears include disputed tax, interest, penalty (New appellant)
Amount payable on Jan 31, 2025: 100% of disputed tax
Amount payable on Feb 1, 2025: 110% of disputed tax

Tax arrears include disputed tax, interest, penalty (Old appellant)
Amount payable on Jan 31, 2025: 110% of disputed tax
Amount payable on Feb 1, 2025: 120% of disputed tax

Tax arrears related to disputed interest/penalty/fee (New appellant)
Amount payable on Jan 31, 2025: 25% of disputed interest/penalty/fee
Amount payable on Feb 1, 2025: 30% of disputed interest/penalty/fee

Tax arrears related to disputed interest/penalty/fee (Old appellant)
Amount payable on Jan 31, 2025: 30% of disputed interest/penalty/fee
Amount payable on Feb 1, 2025: 35% of disputed interest/penalty/fee

According to the guidelines provided by the Income Tax Department, any pending appeals as of July 22, 2024, will be eligible for inclusion in the Vivad Se Vishwas Scheme 2024, regardless of their final resolution status (withdrawn or disposed of).

As stated in the FAQs released by the CBDT, individuals must make a declaration by January 31, 2025, to participate in the program. In cases where a pending appeal is resolved before the declaration deadline, the disputed tax amount will be assessed based on the assumption that the appeal is still ongoing. Nonetheless, such appeals will still be considered for resolution under the program.

The Income Tax Department mandates that declarants electronically submit Form 1 and Form 3 through the e-filing portal at www.incometax.gov.in. Form 4 will be provided by the income tax department following the resolution of the income tax dispute.