At a Glance
The Vivad se Vishwas Scheme, 2024 (‘2024 Scheme’) offers a chance for taxpayers to settle their outstanding income tax disputes pending as of 22.07.2024. The 2024 Scheme adheres to the framework of the previous Vivad se Vishwas Act, 2020 (‘2020 Scheme’) in terms of its applicability and dispute resolution procedures. Owing to the success of the 2020 Scheme and the volume of pending litigation before various appellate forums, the FinanceITAT Bill (No. 2), 2024 (2024 Bill) was introduced on 23.07.2024 and passed by the Lok Sabha on 07.08.2024 proposed a similar scheme. This update outlines the key features of the 2024 Scheme as announced in the Union Budget 2024.
What are the key features and benefits of the 2024 Scheme?
The 2024 Scheme aims to resolve pending income tax disputes efficiently, and its key features include:
The 2024 Scheme covers disputes pending as of 22.07.2024, including appeals, writs, and special leave petitions (‘SLPs’) before various courts and tribunals.
The 2024 Scheme provides complete immunity from prosecution, penalties, and interest on the covered tax arrears. Importantly, the declarations under the 2024 Scheme will not establish precedents for future cases.
Aims to reduce pending tax disputes and allows taxpayers to settle the disputes by paying a portion of the disputed tax, interest, and penalties as prescribed.
What are Eligible Disputes Under the 2024 Scheme?
The 2024 Scheme is laid out in the pattern of the 2020 Scheme, which covered disputes pending as of 31.01.2020. It covers disputes such as appeals, writs, and SLPs pending as of 22.07.2024, whether filed by the taxpayer or tax authority before the tax authorities such as the Commissioner (Appeals) or Joint Commissioner (Appeals), DRP, the Income Tax Appellate Tribunal (‘ITAT’), the High Court, and the Supreme Court.
The 2024 Scheme also covers any pending application for revision filed by taxpayers before the Commissioner and any assessments pending after the issuance of directions by the Dispute Resolution Panel (‘DRP’). It covers disputes relating to the taxes determined under the provisions relating to the tax deducted at source and tax collected at source.
What are the Non-Eligible Disputes Under the 2024 Scheme?
The 2024 Scheme does not cover disputed tax, interest, penalty, or fees related to:
The tax year for which an assessment or reassessment has been made based on a search and the tax year for which prosecution has been instituted.
Any undisclosed income from a source outside India or undisclosed assets located outside India.
An assessment/reassessment based on information received through tax information exchange agreements.
Additionally, the 2024 Scheme excludes
Individuals with a detention order under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, unless revoked or set aside by a higher authority.
Individuals prosecuted or convicted under the Unlawful Activities (Prevention) Act, 1967; the Narcotic Drugs and Psychotropic Substances Act, 1985; the Prohibition of Benami Property Transactions Act, 1988; the Prevention of Corruption Act, 1988, or the Prevention of Money-Laundering Act, 2002.
Individuals prosecuted by an Income-Tax authority for offences under the Bharatiya Nyaya Sanhita, 2023, or for enforcing civil liability under current laws.
Individuals convicted of offences under the Bharatiya Nyaya Sanhita, 2023.
Individuals notified under s. 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992.
How is the disputed amount computed?
Particulars | Disputed tax (inclusive of surcharge and cess, but excluding interest) |
Where appeal/writ/SLP is pending before any appellate forum as of 22.07.2024 | Tax payable if such appeal/writ/SLP was to be decided against the taxpayer |
Where objections are pending before DRP as of 22.07.2024 | Tax payable if DRP confirms the variation proposed in the draft order. |
Where DRP has issued directions, but the tax authority has not completed the assessment on or before 22.07.2024 | Tax payable as per the assessment order to be passed by the tax authority |
Where an application for revision filed by the taxpayer is pending as of 22.07.2024 | Tax payable if such application for revision was not to be accepted |
How are the Disputed Amounts Settled?
Particulars | If the taxpayer settles before 31.12.2024 | If the taxpayer settles after 31.12.2024 but on or before the last date (as may be notified) |
Cases involving disputed tax, interest, and penalty | ||
For Appeal filed after 31.01.2020 but on or before 22.07.2024 | 100% of the disputed tax | 110% of the disputed tax |
Appeal filed before 31.01.2020 and pending at the same appellate forum | 110% of the disputed tax | 120% of the disputed tax |
Cases involving disputed penalty or interest or fee | ||
Appeal filed after 31.01.2020, but on or before 22.07.2024 | 25% of the disputed penalty, interest or fee | 30% of the disputed penalty, interest or fee |
Appeal filed before 31.01.2020 and pending at the same appellate forum | 30% of disputed penalty, interest, or fee | 35% of disputed penalty, interest, or fee |
In the following cases, the payable amount will be half of the amount calculated as per the table above:
When the income tax authority files an appeal, writ petition or SLP before an appellate forum.
When the taxpayer files an appeal against a favourable decision before the ITAT or High Court, where the High Court or Supreme Court does not reverse the decision.
When the taxpayer files an appeal against a favourable decision before the High Court, the Supreme Court does not reverse the decision.
Other Aspects
To avail of the 2024 Scheme, a taxpayer must submit a declaration to the designated authority (‘DA’) within 15 days of the declaration form’s issuance. The DA will then issue a certificate specifying the payable amount. The taxpayer must pay this amount within 15 days of receiving the certificate.
To finalise the dispute through the DA, taxpayers must withdraw all appeals, provide proof of payment, and agree not to challenge the settlement.
The settlement becomes void if the taxpayer provides false information or breaches the terms of the 2024 Scheme. The DA cannot initiate criminal actions, levy penalties, or interest related to the dispute. The settlement offers no additional benefits and does not set a precedent. Payments are non-refundable, but excess tax paid will be refunded without interest.
Our Analysis
The 2024 Scheme offers taxpayers a fresh opportunity to resolve pending tax disputes, potentially boosting business confidence. It provides full relief from interest, penalties, and prosecution for tax-related disputes, with partial relief for those involving interest, penalties, or fees. While building on the 2020 Scheme, the 2024 Scheme excludes certain cases and could benefit from a wider scope. A key improvement is the removal of tax increase mandates for taxpayers. However, the 2024 Scheme’s focus on appeals and court cases limits its overall reach, with uncertainties around review petitions and Settlement Commission orders.
Authored by Aishwarya Pawar, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.
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