Income Tax Department Issues Clarifications on Direct Tax Vivad Se Vishwas Scheme 2024, Know Important FAQs

The Income Tax Department has recently issued a set of frequently asked questions (FAQs) regarding the Direct Tax Vivad Se Vishwas (DTVSV) Scheme 2024. This scheme, introduced in the 2024 Budget, offers taxpayers an opportunity to settle pending income tax disputes. Taxpayers can resolve their disputes by paying the disputed tax amount along with an additional specified percentage, while the department waives off all interest and penalties.

The main aim of the DTVSV Scheme is to reduce pending tax litigation, generate timely revenue for the government, and provide taxpayers with peace of mind, certainty, and savings on time and resources that would otherwise be spent on lengthy legal processes. The Income Tax Department clarified these points in a circular issued on December 16, 2024.

Key Points from the FAQs

Eligibility for the Scheme

1. Pending Appeals as of July 22, 2024
   If a taxpayer’s appeal was pending on July 22, 2024, they can still apply for the scheme, even if the appeal was disposed of after that date.
2. Appeal Dismissed or Withdrawn
   If an appeal was dismissed or withdrawn after July 22, 2024, the taxpayer can still apply for settlement under the scheme, as the appeal was pending on the specified date.
3. Late Filing of Appeal
   If a taxpayer files an appeal after July 22, 2024, even with an application for delay condonation, they are not eligible for the scheme.
4. Appeal Admission
   If an appeal and condonation application were filed before July 22, 2024, and the appeal was admitted, the taxpayer can apply for the scheme.
5. Search Action Cases
   Taxpayers who underwent a search action before April 1, 2021, and have assessments under sections 153A or 153C of the Income Tax Act, are not eligible for the scheme.
6. Appeals Against Intimations
   Appeals filed against intimation under section 143(1) of the Income Tax Act, pending as of July 22, 2024, are eligible for settlement.
7. Review Petitions
   Review petitions pending in High Courts or the Supreme Court are not considered as pending appeals and are not eligible for the scheme.
8. Prosecution Cases
   If prosecution proceedings have not been initiated before the court, the taxpayer can still apply for the scheme. However, if prosecution has been filed for a specific assessment year, the taxpayer cannot apply for the scheme for that year.

Payment and Penalty Clarifications

1. Payment Dates and Rates
   The amount payable under the scheme depends on the date the declaration is filed. If the declaration is filed by December 31, 2024, the taxpayer will benefit from a lower rate. Payments for declarations filed after January 1, 2025, will be subject to a higher rate.
2. Credit for Taxes Paid
   If taxes have already been paid before filing the declaration, the taxpayer will receive credit for these payments against the disputed tax under the scheme.
3. Penalty Appeals
   Penalty appeals that are not related to the disputed tax can be settled independently. If the disputed tax is settled under the scheme, the penalties related to it will also be waived.
4. TDS and Deductor Liabilities
   In cases where the deductee has settled their appeal, the TDS deductor will be relieved from liability under section 201(1) of the Income Tax Act, but they will still be liable for any interest payable. The deductor can also claim expense deductions under section 40(a) of the Act.

Set-Aside and APA/MAP Cases

1. Set-Aside Appeals
   Appeals that have been set aside to the Assessing Officer (AO) are not covered under the scheme. However, if an appeal has been set aside fully to the Income Tax Appellate Tribunal (ITAT) or Commissioner of Income Tax (CIT), it will be eligible for settlement.
2. APA/MAP Cases
   The scheme does not allow partial settlement of issues. If an appeal is pending that involves issues related to an Advance Pricing Agreement (APA) or Mutual Agreement Procedure (MAP), the entire dispute must be settled under the scheme.

Conclusion

The Direct Tax Vivad Se Vishwas Scheme 2024 offers taxpayers a chance to settle their disputes with the Income Tax Department in a simplified manner, providing relief from interest and penalties. By adhering to the rules and timelines, taxpayers can benefit from a quicker resolution to their pending tax issues. The detailed FAQs released by the Income Tax Department aim to guide taxpayers in understanding their eligibility and the process of applying for the scheme.