Vivad Se Vishwas Scheme: Last Date For Settlement Of Tax Arrears Announced By Govt

The Central Board of Direct Taxes (CBDT), Ministry of Finance, has officially notified April 30, 2025, as the last date for filing declarations to settle tax arrears under the Direct Tax Vivad Se Vishwas Scheme, 2024. This crucial deadline announcement was made through Notification No. S.O. 1650(E), issued on April 8, 2025 JurisHour.

What is the Vivad Se Vishwas Scheme 2024?

Announced in the Union Budget 2024-25 by Finance Minister Nirmala Sitharaman, the Direct Tax Vivad Se Vishwas Scheme 2024 (also referred to as Vivad Se Vishwas 2.0) is designed to resolve pending income tax disputes through a structured settlement process. The scheme became operational on October 1, 2024 ClearTax.

This initiative follows the success of the original Vivad Se Vishwas scheme introduced in 2020, which settled 1,46,701 disputes and collected approximately INR 1 lakh crores in tax revenue PwC.

Eligibility Criteria

The scheme applies to disputes and appeals (including writs) that are pending as of July 22, 2024, before various forums:

• The Supreme Court
• High Courts
• Income Tax Appellate Tribunal
• Commissioner/Joint Commissioner (Appeals)
• Dispute Resolution Panel (DRP) or where DRP has issued orders but the final assessment order is awaited
• Revision applications filed under Section 264 of the Income-tax Act, 1961 ClearTax

Payment Structure

The payment requirements differ between “new appellants” and “old appellants” and also depend on when the payment is made:

For Disputed Tax, Interest, and Penalty:

New Appellants (appeals filed after January 31, 2020 but before July 22, 2024):

• Payment on or before December 31, 2024: 100% of the disputed tax
• Payment after January 1, 2025 (but before April 30, 2025): 110% of the disputed tax

Old Appellants (appeals pending on or before January 31, 2020):

• Payment on or before December 31, 2024: 110% of the disputed tax
• Payment after January 1, 2025 (but before April 30, 2025): 120% of the disputed tax

For Disputed Interest, Penalty, or Fee Only:

New Appellants:

• Payment on or before December 31, 2024: 25% of the disputed amount
• Payment after January 1, 2025 (but before April 30, 2025): 30% of the disputed amount

Old Appellants:

• Payment on or before December 31, 2024: 30% of the disputed amount
• Payment after January 1, 2025 (but before April 30, 2025): 35% of the disputed amount caonnet.com

Reduced Payment in Special Cases

The amount payable can be reduced to 50% in certain scenarios, including:

• When the appeal was filed by tax authorities
• When the dispute relates to an issue already decided in favor of the taxpayer by the Income Tax Appellate Tribunal or High Court and not reversed by a higher authority

Settlement Process and Required Forms

The CBDT has notified four forms for the settlement process:

1. Form 1: The declaration and undertaking by the declarant expressing intention to settle the tax dispute. This must be filed by April 30, 2025.
2. Form 2: Certificate issued by the Designated Authority within 15 days of receiving the declaration, detailing the tax arrears and the amount payable.
3. Form 3: For intimating payment, submitted by the declarant along with proof of withdrawal of any related legal proceedings.
4. Form 4: The final order issued by the Designated Authority, confirming full and final settlement of the tax dispute Tax2win.in.

Forms 1 and 3 must be submitted electronically through the Income Tax Department’s e-filing portal (www.incometax.gov.in) PIB.

Key Differences Between Vivad Se Vishwas 1.0 and 2.0

While both schemes aim to resolve tax disputes, there are notable differences:

1. Eligibility: VsV 1.0 included appeals where the filing time had not expired, while VsV 2.0 only covers disputes pending as of July 22, 2024.
2. Exclusions:
   • VsV 1.0 excluded search and seizure cases with disputed tax exceeding INR 50 million
   • VsV 2.0 excludes all search and seizure cases regardless of the disputed amount
   • VsV 1.0 excluded cases arising from Settlement Commission orders, while VsV 2.0 does not have this exclusion
3. Payment Structure: VsV 2.0 provides a clearer cap on the maximum payable amount for those who opt in after the initial due date PwC.

Benefits of the Scheme

The scheme offers several key benefits:

1. Simplified process to resolve pending income tax disputes
2. Immunity from further proceedings, penalties, or interest related to resolved tax arrears
3. No admission of liability or concession to the tax assessment
4. Reduction in the payable amount under certain conditions
5. Final closure of long-standing disputes ClearTax

Conclusion

With the April 30, 2025 deadline now established, taxpayers with eligible disputes have a clear timeframe to avail themselves of the Direct Tax Vivad Se Vishwas Scheme 2024. Given the success of the previous scheme and the government’s continued focus on reducing tax litigation, this represents a significant opportunity for those with pending tax disputes to achieve resolution on favorable terms.

Taxpayers are advised to review their pending disputes and consider filing their declarations well before the deadline to take advantage of the reduced payment amounts available for early settlement.