A significant update to the Direct Tax Vivad Se Vishwas Scheme, 2024, was announced to offer relief to taxpayers who were previously unable to apply due to specific circumstances.

In an order dated January 20, 2025, the Ministry of Finance addressed these issues, enabling more taxpayers to settle their pending income tax disputes through the scheme.

This scheme, introduced in the 2024 Budget, is designed to help resolve ongoing tax disputes by waiving interest and penalties if the taxpayer settles the disputed tax amount. However, taxpayers have until January 31, 2025, to pay the full disputed amount to avail of a reduced settlement. After this date, the payment terms will change.

Enacted under the Finance (No. 2) Act, 2024, and effective from October 1, 2024, the scheme aims to resolve direct tax disputes amicably. However, certain situations created complications, including cases where:

1. An order was passed before the cutoff date of July 22, 2024.
2. The time for filing an appeal against the order was still open as of the cutoff date.
3. Appeals were filed after July 22, 2024, but within the allowed time frame.
4. Appeals were submitted without a delay condonation application.

To address these complications, the Central Government has now clarified that such appeals will be considered as pending as of July 22, 2024, making those taxpayers eligible for the scheme. The disputed tax amount will be calculated based on the appeal filed, and the relevant scheme rules will apply to these cases.

The order, issued under Section 98 of the Finance (No. 2) Act, 2024, reaffirms the government’s commitment to resolving tax disputes efficiently and clarifies procedural guidelines. Taxpayers are encouraged to review their cases and seek professional advice to take advantage of the scheme before the deadlines.

To download the official order, click here.

For understanding the Direct Tax Vivad se Vishwas Scheme 2024, click here.

CBDT Clarifies DTVSV Scheme 2024

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The central Board of Direct Tax (CBDT) has extended the direct tax Vivad se Vishwas scheme deadline from 31^st December 2024 to 31^st January 2025 via Circular No.20/2024.

From 1^st February 2025 extra 10% tax will be payable on applying for Vivad se Vishwas scheme 2024.

Taxpayers who file declaration on or before 31^st January 2025 will get the benefit wherein amount payable will be determined as per column (3) of the table specified in section 90 of the scheme and not as per column (4). For better understanding column (3) and column (4) is stated below:

Key Forms under Vivad se Vishwas Scheme are:

Form-1: The declaration form through which taxpayers express their intent to settle disputes under the VSV Scheme.

Form-2: A “Certificate of Settlement” issued by the Income-tax Department upon receipt of Form-1 and successful payment by the taxpayer.

Timeline for VSV scheme:

Taxpayers can file Form 1 declaration for settlement of dispute till 31 Jan 2025. However, this extension is not for those cases where Form 2 has been issued where Form 1 has been already filed by the taxpayer. Payment of disputed tax needs to be made within 15 days from the date of receipt of Form 2.

CBDT has already issued 2 sets of FAQs (last on 16^th December) to resolve certain ambiguities in the provisions of VSV for better understanding of taxpayers.

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