April 30 is the final date for taxpayers to address outstanding income-tax disputes under the Vivad Se Vishwas (VSV) 2.0 scheme. Introduced in October 2024, this initiative aims to decrease litigation and enhance revenue collection by providing a systematic approach for dispute resolution.
A Move Towards Streamlined Dispute Resolution
“The VSV 2.0 initiative is part of the Indian government’s extensive efforts to minimize tax litigation and release locked-up revenue,” states Karishma Phatarphekar, partner at Deloitte India. “It seeks to reduce the court backlog and create a more taxpayer-friendly atmosphere.”
Phatarphekar notes that the initial version of the scheme (VSV 1.0) successfully addressed over 146,000 tax appeals and facilitated the collection of approximately Rs 1 lakh crore in revenue. The government anticipates that the second iteration will produce comparable outcomes.
Who Qualifies for VSV 2.0
According to Phatarphekar, taxpayers can participate if they have pending disputes as of July 22, 2024, which include:
- Appeals
- Writ petitions
- Cases under the Dispute Resolution Panel, as long as no final assessment order has been issued
To take advantage of the scheme, taxpayers need to complete Form-1 on the Income-Tax Department’s website, detailing the disputed tax amount and providing necessary documents such as assessment orders and related notices.
Reasons to Enroll
Phatarphekar highlights several key advantages:
- Waiver of interest and penalties
- Protection from future proceedings
- Quick resolution without extended litigation
However, she cautions against potential downsides. “Any payment made under VSV 2.0 is non-refundable, and once resolved, disputes cannot be reinstated — a double-edged sword for many.”
Avoid Common Mistakes
Phatarphekar points out frequent errors made in applications for the scheme:
- Miscalculating the disputed tax amount
- Submitting incomplete documents
- Missing the application deadline
“Thoroughly review your case,” advises Phatarphekar. “Consult with a tax expert, file early, and ensure that all paperwork is complete.”