Proposed Direct Tax Vivad Se Vishwas Scheme 2024: Key Details and Benefits

Introduction

The Income Tax Act provides a structured mechanism for filing appeals against orders issued during its proceedings. Both taxpayers and the Department can appeal before various appellate authorities, including the Joint Commissioner of Income Tax (Appeals), the Commissioner of Income Tax (Appeals), the Income Tax Appellate Tribunal, the High Court, and the Supreme Court.

Purpose of the Direct Tax Vivad Se Vishwas Act, 2020

The Central Board of Direct Taxes (CBDT) aims to expedite the disposal of appeals within its administrative framework. One significant initiative is the Direct Tax Vivad Se Vishwas Act, 2020, introduced for appeals pending as of January 31, 2020. The Scheme received positive feedback from taxpayers and significantly contributed to government revenue.

Growing Litigation and the Proposal for 2024 Scheme

Litigation levels have increased, as the number of cases appealed surpasses those resolved. In light of the success of the previous Act and ongoing appeals pending at the Commissioner of Income Tax (Appeals) level, a new Direct Tax Vivad Se Vishwas Scheme, 2024, is proposed. This initiative aims to streamline the dispute resolution process while minimizing costs to the exchequer.

Overview of the Proposed Scheme

The scheme is set to introduce a new chapter within the Income Tax Act, which includes the following key provisions:

• Definitions: Key terms such as “appellant,” “appellant forum,” “declarant,” “declaration,” “designated authority,” “disputed fee,” “disputed income,” “disputed interest,” “disputed penalty,” “disputed tax,” “last date,” “specified date,” and “tax arrears.”
• Amounts Payable: Details concerning the payment amounts required from the declarant.
• Declaration Requirements: Specifics on the information necessary for the declaration form.
• Payment Guidelines: Instructions regarding the timing and method of paying tax arrears.
• Immunity Provisions: Immunity from legal proceedings concerning offenses and penalties under specified conditions.
• Refund Policy: Clarification that no refunds will be provided for amounts paid under the Scheme.
• Scope of Benefits: Limitations on the applicability of benefits, concessions, or immunity in other proceedings.
• Exclusions: Situations where the Scheme will not be applicable.
• Authority of the CBDT: The power of the Central Board of Direct Taxes to issue necessary directions.
• Government Powers: The authority of the Central Government to address any implementation challenges and establish rules to operationalize the Scheme.

The Scheme is proposed to take effect from a date to be specified by the Central Government, which will also announce the last date for its implementation.

Payable Amount Structure

Taxpayers opting to settle disputes under this Scheme will be required to pay specific amounts as follows:

Aggregate Amounts

1. Disputed Tax, Interest, and Penalties:

   • Appeals filed after January 31, 2020, and before July 22, 2024:
     • By 31 December 2024: 100% of disputed tax
     • On or after January 1, 2025: 110% of disputed tax
   • Appeals pending at the same forum before January 31, 2020:
     • By 31 December 2024: 110% of disputed tax
     • On or after January 1, 2025: 120% of disputed tax

2. Disputed Interest/Penalty/Fee:

   • Appeals filed after January 31, 2020, and before July 22, 2024:
     • By 31 December 2024: 25% of disputed amounts
     • On or after January 1, 2025: 30% of disputed amounts
   • Appeals/revision petitions pending at the same forum before January 31, 2020:
     • By 31 December 2024: 30% of disputed amounts
     • On or after January 1, 2025: 35% of disputed amounts

Reduction of Payable Amount to 50%

The payable amount may be reduced to 50% under these circumstances:

• The taxpayer’s appeal pertains to an issue favorably decided by the Income Tax Appellate Tribunal or High Court, provided that the decision has not been reversed by a higher court.
• The appeal is initiated by tax authorities.

Cases where orders have been issued without an appeal as of July 22, 2024, but where the appeal timeframe remains open may not be covered under this Scheme. The Government is expected to provide clarification regarding this matter.

Conclusion

The proposed Direct Tax Vivad Se Vishwas Scheme, 2024 aims to alleviate the growing backlog of appeals and provide a more efficient resolution process for taxpayers. Clarity on the Scheme’s details and the payable amounts will be essential for effective implementation and taxpayer compliance.