CBDT comes out with FAQs on Direct Tax Vivad se Viswas scheme 2024

In order to provide more clarity on the second edition of the Direct Tax Vivad se Viswas scheme 2024 (VSV 2.0), which became operational on October 1, the Central Board of Direct Taxes (CBDT) on Tuesday issued a guidance note in the form of Frequently Asked Questions (FAQs).

The FAQ states that individuals are eligible for the Direct Tax Vivad Se Vishwas Scheme, 2024 if they meet any of the following conditions: an appeal, writ petition (WP), or special leave petition (SLP) is pending before an appellate forum as of July 22, 2024, either filed by the individual or the income tax authority; they have submitted objections to the Dispute Resolution Panel (DRP) under section 144C of the Income-tax Act, 1961, and no directions have been issued by the DRP by that date; the DRP has issued directions under section 144C(5), but the Assessing Officer (AO) has not completed the process; or they have filed an application for revision under section 264 of the Act, which is pending as of the specified date.

The objective of the scheme is to reduce pending income tax litigation, generate timely revenue for the government, and benefit taxpayers by offering peace of mind, certainty, and savings on time and resources typically spent on prolonged and contentious legal processes.

Moreover, the new scheme provides for lesser settlement amounts for a ‘new appellant’ compared to an ‘old appellant’, thereby creating a distinction. The scheme defines an “old appellant case” as one where the taxpayer was an appellant on or before January 31, 2020. The scheme also prescribes lesser settlement amounts for taxpayers who declare on or before December 31, 2024, compared to those who file the declaration thereafter.

The FAQ outlines four separate forms for the scheme: Form 1 is for filing declarations and undertakings by the declarant; Form 2 is for the certificate issued by the Designated Authority; Form 3 is for notifying payment by the declarant; and Form 4 is for the order of full and final settlement of tax arrears by the Designated Authority. Form 1 must be filed separately for each dispute, but if both the appellant and the income tax authority have appealed the same order, only one Form 1 is required. Payment notifications should be submitted using Form 3, along with proof of withdrawal of any appeals, objections, applications, writ petitions, special leave petitions, or claims to the Designated Authority.

The Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024, was announced in the Union Budget 2024-25 by the Union Finance Minister to resolve pending income tax disputes. The scheme was enacted through the Finance (No. 2) Act, 2024. Additionally, the corresponding Rules and Forms for implementing the scheme were notified on September 20.