The Income Tax Department has extended the deadline for the Vivad Se Vishwas Scheme 2024 from December 31, 2024, to January 31, 2025. This scheme allows taxpayers to resolve ongoing disputes by paying a reduced amount of income tax. Without this extension, taxpayers would have faced an additional 10% tax for applying under the scheme. The extended deadline offers significant relief to taxpayers who have yet to take advantage of the Vivad Se Vishwas Scheme 2024.
The Central Board of Direct Taxes (CBDT), exercising its powers under subsection (2) of section 97 of the Direct Tax Vivad Se Vishwas Scheme, 2024 (‘the Scheme’), has extended the due date for determining the amount payable under column (3) of the Table specified in section 90 of the Scheme from December 31, 2024, to January 31, 2025,” stated the Income Tax Department in a circular dated December 30, 2024.
Starting February 1, 2025, an additional 10% tax will be applicable when applying for the Vivad Se Vishwas Scheme 2024.
“As per the Direct Tax Vivad Se Vishwas Scheme, Rules, and Guidance Note of 2024, in cases where declarations are filed on or before January 31, 2025, the amount payable will be determined as per column (3) of the Table specified in section 90 of the Scheme. However, for declarations filed on or after February 1, 2025, the amount payable will be determined as per column (4) of the same Table,” the Income Tax Department stated in a circular.
Mihir Tanna, Associate Director at S.K. Patodia LLP, mentioned, “The 31-day extension provides significant relief to taxpayers still in the process of filing applications under VSV. This extra time allows taxpayers to evaluate the impact and benefits of resolving income tax disputes under appeal, especially given the recent clarification in the form of FAQs issued by CBDT on December 16. The extension helps in understanding the scheme better and applying strategically to mitigate litigation costs and ensure a smoother dispute resolution process.
| Serial Number | Nature of Tax Arrears | Amount Payable on or before January 31, 2025 | Amount Payable on or after February 1, 2025 & before last date |
|---|
- | Tax arrears include disputed tax, interest, penalty (New appellant) | 100% of disputed tax | 110% of disputed tax
- | Tax arrears include disputed tax, interest, penalty (Old appellant) | 110% of disputed tax | 120% of disputed tax
- | Tax arrears related to disputed interest/penalty/fee (New appellant) | 25% of disputed interest/penalty/fee | 30% of disputed interest/penalty/fee
- | Tax arrears related to disputed interest/penalty/fee (Old appellant) | 30% of disputed interest/penalty/fee | 35% of disputed interest/penalty/fee
Chartered Accountant Kushal Soni commented, “This extension provides relief to taxpayers still evaluating whether to opt for the scheme. Taxpayers can now file Form 1 declaration for dispute settlement until January 31, 2025. However, this extension does not apply to cases where Form 2 has already been issued, as Form 1 must have been filed by the taxpayer. Payment of disputed tax must be made within 15 days from the date of Form 2 issuance.”
According to Chartered Accountant Jigar Suba, “Key Forms under the Vivad Se Vishwas Scheme 2024 are:
- Form-1: The declaration form used by taxpayers to express their intent to settle disputes under the VSV Scheme.
- Form-2: A ‘Certificate of Settlement’ issued by the Income-tax Department upon receiving Form-1 and successful payment by the taxpayer.”
“Taxpayers who file Form-1 by January 31, 2025, will avoid the additional 10% tax, provided they express their willingness to opt for the scheme within this period. However, the tax must be paid under the scheme within 15 days of receiving Form-2 from the Income Tax Department. This extension demonstrates the government’s commitment to reducing litigation, simplifying compliance, and fostering a dispute-free tax environment. Taxpayers are encouraged to utilize this opportunity to settle disputes and ensure timely compliance,” says Suba.
Chartered Accountant Himank Singla, Partner at SBHS and Associates, states, “The due date for determining the amount payable under Section 90, column (3) of the Scheme’s Table has been extended from December 31, 2024, to January 31, 2025. This extension is essential for taxpayers intending to avail the benefits of reduced payment rates under column (3). The Circular outlines a bifurcation based on the date of declaration filing:
- On or before January 31, 2025: Payable amount will follow the reduced rates specified in column (3) of the Table under Section 90.
- On or after February 1, 2025: Payable amount will follow the higher rates specified in column (4) of the same Table.”
“The extension aligns with the government’s objective of resolving tax disputes effectively under the Vivad Se Vishwas Scheme. By extending the timeframe, the government ensures higher participation, especially from taxpayers who might have been constrained by the original deadline,” says Singla.
The Direct Tax Vivad Se Vishwas Scheme 2024, announced in Budget 2024, offers taxpayers an opportunity to resolve their pending tax disputes with the Income Tax Department. Under this scheme, taxpayers are required to pay the disputed tax amount along with a specified percentage of that disputed amount. Upon successful payment, including the submission of the application form, the Income Tax Department will waive off all additional penalties, interest on penalties, and close the tax dispute case.
Source: The Economic Times
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