Guidance Note 1/2024 on the Direct Tax Vivad se Vishwas Scheme, 2024

Issued by:Central Board of Direct Taxes (CBDT), Ministry of Finance, Department of Revenue

Circular Number: 12 of 2024

Date of Issue: October 2024

Subject Matter:Guidance Note 1/2024 clarifies the provisions of the Direct Tax Vivad se Vishwas Scheme, 2024, established under The Direct Tax Vivad se Vishwas Act, 2024. The scheme is designed to facilitate the resolution of long-standing tax disputes, reduce litigation, and improve tax collection efficiency in a time-bound manner.

Statutory Framework and Objective

The Direct Tax Vivad se Vishwas Act, 2024 (hereinafter referred to as “the Act”) is a legislative measure aimed at:

Providing a Dispute Resolution Mechanism: Encouraging the settlement of pending direct tax disputes by offering relief from penalties and interest.
Reducing Litigation: Addressing approximately 4.8 lakh pending tax disputes across forums as of March 31, 2024.

The scheme operates within the framework of the Act and subsequent rules notified by CBDT under Section 11 of the Act.

Key Features of the Scheme

1. Applicability

The scheme is applicable to:

Appeals or writs pending before the Commissioner (Appeals), Income Tax Appellate Tribunal (ITAT), High Courts, or the Supreme Court as of 31st March 2024.
Disputes arising out of orders of assessment, reassessment, or revision under the Income Tax Act, 1961.

Exclusions:Certain cases are ineligible, such as:

Disputes involving undisclosed foreign income or assets (Section 72C of the Black Money Act, 2015).
Cases involving severe fraud, narcotics, or money laundering under the respective acts.

2. Procedural Requirements

Step 1: Filing of Declaration

Taxpayers must file a declaration in Form-1 (Rule 4 of the Direct Tax Vivad se Vishwas Rules, 2024).
Along with Form-1, an undertaking in Form-2 is required to withdraw appeals and other legal proceedings.

Step 2: Verification by Designated Authority (DA)

Upon receiving the declaration, the DA verifies the details and determines the payable amount of tax.
A certificate in Form-3 is issued specifying the amount to be paid by the taxpayer.

Step 3: Payment by the Declarant

Taxpayer must remit the determined amount on or before 31st December 2024, without any additional interest or penalty.
Payments made after the due date will attract interest under Section 220(2) of the Income Tax Act, 1961.

Step 4: Withdrawal of Litigation

Declarants are required to submit proof of withdrawal of appeals or writ petitions within 30 days of payment.

Step 5: Issuance of Final Settlement Order

Upon satisfying all conditions, the DA will issue a final settlement order in Form-4.

Relief Available Under the Scheme

Nature of Tax Dispute	Tax Payable by 31.12.2024	Tax Payable Post 31.12.2024
Disputed Tax	100% of tax	110% of tax
Disputed Penalty, Interest, or Fee	25% of disputed amount	30% of disputed amount

Legal Implications and Benefits

Legislative Authority: The scheme derives statutory authority from Section 10 of the Direct Tax Vivad se Vishwas Act, 2024 and its implementation rules.
Certainty and Transparency: The guidance note provides clear procedural steps, reducing ambiguity.
Savings for Taxpayers: By settling disputes early, taxpayers save on litigation costs, penalties, and accrued interest.

Important Dates and Deadlines

Event	Date
Last date for filing declaration	31st December 2024
Payment without additional interest	31st December 2024
Submission of withdrawal proof	Within 30 days of payment

Conclusion

Circular No. 12 of 2024 acts as a comprehensive guide to the Direct Tax Vivad se Vishwas Scheme, 2024. Taxpayers are advised to carefully adhere to the procedural requirements and deadlines to avail themselves of the benefits offered under the scheme. This initiative represents a significant step towards minimizing litigation, fostering trust between taxpayers and the government, and ensuring ease of tax compliance.