Income Tax Department Releases 2nd FAQ on Vivad Se Vishwas Scheme, Covers Appeals Pending as of July 22
Vivad Se Vishwas Scheme: Income Tax Department Clarifies Eligibility and Payment Rules in New FAQs
The Income Tax Department has confirmed that all appeals pending as of July 22, 2024, will be eligible for the Vivad Se Vishwas Scheme (VSV), even if those appeals are subsequently disposed of or withdrawn. This clarification was included in the second set of FAQs issued by the Central Board of Direct Taxes (CBDT), aimed at providing greater clarity on the scheme.
Taxpayers wishing to participate in the dispute resolution process must file a declaration by December 31, 2024. The CBDT explained that if an appeal was pending on July 22, 2024, but was later disposed of before the taxpayer could submit their declaration, the case would still be eligible for settlement under the scheme, with the disputed tax calculated as if the appeal was still pending.
Sachin Garg, Partner at Nangia & Co LLP, emphasized that this clarification ensures all taxpayers with appeals pending as of July 22, 2024, can still settle under the scheme, regardless of whether their appeal was resolved later. He also noted that to qualify for a reduced disputed tax amount, taxpayers must file their declaration by December 31, 2024, though payment can be made after that date.
Taxpayers will have 15 days to pay the disputed amount from the date they receive a certificate (Form No. 2) from the tax officer. The FAQs also clarify that secondary adjustment will apply in transfer pricing cases unless they pertain to the 2016-17 Assessment Year or earlier, when such provisions did not exist.
Manish Garg, Lead Transfer Pricing and Litigation at AKM Global, welcomed the clarifications, noting that the FAQs address uncertainties surrounding eligibility and the computation of payable amounts under the scheme. He believes the tax department’s efforts to reduce litigation are evident in the intent to enroll a broad base of taxpayers in the scheme.
The Vivad Se Vishwas Scheme was announced in the 2024-25 Budget on July 23, 2024, and officially notified on October 1. Taxpayers who file declarations by December 31, 2024, will only need to pay 100% of the disputed tax amount, with penalties and interest waived. However, those filing after this date will be required to pay 110% of the disputed tax demand.
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