Lesser Settlement Amounts for Tax Filers Before December 31
The Income Tax Department announced the launch of the Vivad Se Vishwas Scheme 2.0, which offers reduced settlement amounts for taxpayers who submit their declarations by December 31, 2024, compared to those who file later.
In her budget speech, Finance Minister Nirmala Sitharaman introduced the Direct Tax Vivad Se Vishwas Scheme 2024, aimed at addressing pending appeals related to income tax disputes. This scheme will be effective from October 1, 2024, and the necessary Rules and Forms have also been released.
This scheme differentiates between ‘new appellants’ and ‘old appellants,’ providing lesser settlement amounts for the former. Additionally, taxpayers who file their declarations by December 31, 2024, will benefit from reduced settlement amounts compared to late filers, according to a statement from the Central Board of Direct Taxes (CBDT).
Four specific Forms have been issued:
- Form-1: Declaration and undertaking by the declarant
- Form-2: Certificate to be issued by the Designated Authority
- Form-3: Intimation of payment by the declarant
- Form-4: Order for full and final settlement of tax arrears by the Designated Authority
It is required that Form-1 be submitted for each dispute individually; however, if both the appellant and the income tax authority have appealed the same order, a single Form-1 can be filed in that instance.
Intimation of payment must be made using Form-3 and submitted to the Designated Authority along with proof of withdrawal of any related appeal, objection, application, writ petition, special leave petition, or claim. Both Forms 1 and 3 should be submitted electronically by the declarant.
These forms will be accessible on the Income Tax Department’s e-filing portal, signifying a move towards better litigation management.
Currently, around 2.7 crore direct tax demands amounting to approximately Rs 35 lakh crore are under dispute in various legal forums. Deloitte India Partner Karishma R. Phatarphekar emphasized the importance for companies to assess their pending income tax litigations from both cost-benefit and broader non-tax perspectives, especially since tax payment rates under the Vivad Se Vishwas 2.0 scheme are set to increase by 10 percent starting January 1, 2025.
In light of the limited timeframe, stakeholders are urged to make informed decisions regarding participation in the scheme promptly.