Vivad Se Vishwas 2.0: Income Tax Department Introduces New Dispute Resolution Scheme

The Income Tax Department has launched Vivad Se Vishwas 2.0, a dispute resolution scheme offering lesser settlement amounts for taxpayers declaring before December 31, 2024. Announced in the budget by Finance Minister Nirmala Sitharaman, the scheme aims to resolve pending income tax disputes and will be effective from October 1, 2024.

The Income Tax Department has rolled out the dispute resolution scheme, Vivad Se Vishwas 2.0, on Saturday. This initiative aims to offer taxpayers reduced settlement amounts if they file their declarations by December 31, 2024, in contrast to those who file afterward.

Announced by Finance Minister Nirmala Sitharaman during her budget speech, the Direct Tax Vivad Se Vishwas Scheme 2024 is set to come into effect from October 1, 2024. The Rules and Forms that enable this scheme have also been released.

This scheme offers lower settlement amounts for 'new appellants' compared to 'old appellants.' It also includes four specific forms to streamline the process: Form-1 for filing declaration and undertaking, Form-2 for certificates issued by Designated Authority, Form-3 for intimation of payment, and Form-4 for the final settlement of tax arrears.

Forms 1 and 3 must be submitted electronically and are available on the Income Tax Department's e-filing portal. With nearly 2.7 crore direct tax issues amounting to about Rs 35 lakh crore being disputed, the scheme is a significant step towards litigation management. Deloitte India Partner Karishma R. Phatarphekar advises companies to promptly consider this scheme given the impending increase in tax payment rates from January 1, 2025.