Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024

Background of the Scheme

The Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024, was announced by Union Finance Minister Nirmala Sitharaman in the Union Budget 2024-25. It provides a streamlined approach for resolving pending income tax disputes. This scheme is designed to reduce the burden of litigation for taxpayers and the tax administration. This article provides detailed information on the DTVSV Scheme, 2024, its forms and procedures for filing it correctly.

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Overview of DTVSV Scheme, 2024

The DTVSV Scheme is effective from October 1, 2024. This scheme offers a reduced settlement amount for a ‘new appellant’ compared to an ‘old appellant’. It also benefits those who file a declaration on or before the deadline (31.12.2024) by providing a lesser settlement amount than those who file after this date.

The DTVSV Scheme is designed to mitigate income tax litigation by allowing taxpayers to resolve income tax appeals, writs, and petitions pending before various appellate authorities, including the High Court and Supreme Court, as on July 22, 2024.

Eligibility Criteria to Opt for the DTVSV Scheme, 2024

To be eligible for the scheme, taxpayers must meet one of the following criteria as on July 22, 2024:

Taxpayers with pending appeals before the Commissioner of Income Tax (Appeals) (CIT(A)), Income Tax Appellate Tribunal (ITAT), High Court, or Supreme Court.
Taxpayers who have filed objections with the Dispute Resolution Panel (DRP) under Section 144C of the Income Tax Act and the DRP have not yet issued directions to the Assessing Officer (AO).
Taxpayers where the DRP have issued directions to the AO, but the AO has not issued a final assessment order.
Taxpayers with pending revision applications under Section 264 of the Income-tax Act.

Forms under the DTVSV Scheme, 2024

The Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024, has four specific forms to facilitate the settlement process:

Form-1: Form for Declaration and Undertaking by the Declarant

Taxpayers can use Form-1 to declare their intention to settle the tax dispute and provide an undertaking to withdraw any pending legal proceedings. Each dispute requires a separate Form-1. Where the taxpayer and the tax authorities have filed an appeal, writ petition, or special leave petition related to the same order, a single Form-1 can be submitted. The declaration and undertaking must be verified by the taxpayer or a person authorized to verify their income tax return. Upon receiving Form-1, the designated authority will electronically acknowledge receipt.

Form-2: Form for Certificate to be issued by Designated Authority

The designated authority issues the Certificate in Form-2 containing particulars of the tax arrear and the amount payable after such determination.

Form-3: Form for Intimation of Payment by the Declarant

The declarant must use Form-3 to inform the designated authority about the successful payment of the settlement amount. This intimation should be accompanied by proof that any appeal, objection, application, writ petition, special leave petition, or claim related to the dispute has been withdrawn.

Form-4: Order for Full and Final Settlement of tax arrears by Designated Authority

The final order is issued by the designated authority in Form-4, confirming the full and final settlement of the tax dispute. It outlines the terms of the settlement, including the amount paid by the taxpayer.

Note: Form-1 and Form-3 for the DTVSV Scheme must be filed electronically by the declarant on the Income Tax Department's e-filing portal.

Amount payable under the DTVSV Scheme

Sl. No.	Nature of Tax arrear	Amount payable under this Scheme on or before 31.12.2024	Amount payable under this Scheme on or after 1.01.2025 but on or before the last date
Appeal is filed after 31/01/2020	Where the tax in arrears is the aggregate of, (i) Disputed tax (ii) Interest chargeable/ charged, (iii) Penalty leviable/levied	Amount of the disputed tax	Amount of disputed tax + 10% of disputed tax
Appeal is filed before 31/01/2020	Where the tax in arrears is the aggregate of (i) Disputed tax (ii) Interest chargeable/charged (iii) Penalty leviable/levied	Amount of disputed tax + 10% of disputed tax	Amount of disputed tax + 20% of disputed tax
Appeal is filed after 31/01/2020	Where the tax in arrears relates to, (i) Disputed interest or (ii) Disputed Penalty or (iii) Disputed fee	25% of the disputed Amount	30% of the disputed Amount
Appeal is filed before 31/01/2020	Where the tax in arrears relates to, (i) Disputed interest or (ii) Disputed Penalty or (ii) Disputed Fee	30% of the disputed Amount	35% of the disputed Amount

Procedures followed in the DTVSV Scheme, 2024

Below, we have detail out the procedures followed under the DTVSV Scheme, 2024:

Declaration and Withdrawal of Appeals:

The declarant must file a declaration with the “designated authority” in the prescribed form and manner.
Once the declaration is filed, any ongoing appeals related to the disputed income, interest, penalty, or fee before the Income Tax Appellate Tribunal, Commissioner (Appeals), or Joint Commissioner (Appeals) shall be deemed to have been withdrawn from the date on which the certificate is issued by the designated authority.
If the taxpayer has filed appeals in higher courts (High Court or Supreme Court), they shall withdraw such appeal with the leave of the court after obtaining the certificate under sub-section (1) of section 92. Proof of withdrawal must be submitted to the designated authority.
The taxpayer must provide an undertaking stating they will not pursue any further legal remedies or claims related to the tax arrear.

Determination and Payment of Amount Payable:

The designated authority will determine the amount payable by the declarant within ‘fifteen days’ of receiving the declaration and issue a certificate containing particulars of the tax arrear and the amount payable.
The declarant must pay the determined amount within ‘fifteen days’ of receiving the certificate and inform the designated authority about payment.
The order determining the amount payable is conclusive, and the matters covered cannot be reopened in any other proceeding.

Consequences of Non-Compliance:

False Particulars: If any information provided in the declaration is incorrect or misleading, the declaration will be considered invalid.
Violation of Conditions: If the taxpayer fails to comply with the terms and conditions of the scheme or acts in a way that contradicts their undertaking, the declaration will be considered invalid.
Revival of Proceedings: In both cases of submission of false particulars and violation of conditions, any previously withdrawn legal proceedings and claims shall be deemed reinstated.

CBDT Notification on Direct Tax Vivad Se Vishwas (DTVSV) Rules, 2024

We have attached below the CBDT Notification on Direct Tax Vivad Se Vishwas (DTVSV) Rules, 2024.

Conclusion

The Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024, offers a valuable opportunity for taxpayers to resolve their income tax disputes efficiently and with potential financial benefits. The scheme aims to resolve the litigation burden on taxpayers and the tax administration by providing a streamlined process and reduced settlement amounts. The availability of clear rules and forms and the option to file electronically further simplifies the settlement process. Taxpayers facing pending tax disputes should carefully consider the benefits and eligibility criteria of the DTVSV Scheme to determine if it is a suitable option for them.

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