New Vivad Se Vishwas 2.0 tax resolution scheme to start on Oct 1 — what you need to know

The government has officially announced October 1, 2024, as the starting date for Vivad Se Vishwas 2.0, the direct tax dispute resolution scheme. If you're involved in a tax dispute, this scheme might be your chance to resolve it efficiently.

Originally introduced during the 2024-25 Union Budget, the scheme is designed to handle income tax disputes that are currently tied up in appeals. Confirming the news, the finance ministry said in its notification: "The central government hereby appoints the 1st day of October, 2024 as the date on which the Direct Tax Vivad Se Vishwas Scheme, 2024 shall come into force."

The scope of the disputes

To give you an idea of the scale, about 2.7 crore direct tax demands are currently being contested, amounting to a staggering Rs 35 lakh crore. These disputes are scattered across various legal forums, and Vivad Se Vishwas 2.0 aims to help clear this backlog.
In her Budget speech, Finance Minister Nirmala Sitharaman highlighted the government’s dedication to simplifying taxes and minimising litigation. She said, "The government will continue its efforts to simplify taxes, improve taxpayer services, provide tax certainty and reduce litigation while enhancing revenues."

Who can avail the scheme?

If you have any pending disputes or appeals, including writs and special leave petitions, whether filed by you or the tax authorities, as of July 22, 2024, you are eligible to take advantage of this scheme. The list of eligible cases includes those pending before the Supreme Court, high courts, Income Tax Appellate Tribunal, and Commissioner/Joint Commissioner (Appeals). It also covers cases before the Dispute Resolution Panel (DRP) and revision petitions awaiting a decision from the Commissioner of Income Tax.
However, the window to decide whether or not to participate in the scheme is limited. As Karishma R. Phatarphekar, Partner at Deloitte India, said: "Given the limited time window, an informed decision on opting for the scheme should be made promptly." The rules and forms for the scheme are expected to be published "imminently in the coming week."

Success of the original Vivad Se Vishwas

For those who are wondering about the potential impact, the first Vivad Se Vishwas scheme, introduced in 2020, resolved a significant number of cases. More than 1 lakh taxpayers participated, and the government collected about Rs 75,000 crore in taxes. With this track record, the expectations from Vivad Se Vishwas 2.0 are high.

With October 1 just around the corner, now is the time to prepare if you are considering resolving your tax dispute through Vivad Se Vishwas 2.0. As the rules and forms are expected shortly, it’s wise to consult your tax advisor and make a decision soon. This scheme could provide the relief you’ve been waiting for while contributing to a more efficient tax system for all.

(With inputs from PTI)