India’s Central Board of Direct Taxes (CBDT) announced the effective date and the rules for implementing the “Direct Tax Vivad Se Vishwas Scheme 2024” (VSV), which was introduced in the 2024 Budget to resolve tax disputes and reduce litigation backlogs.
According to Notification No. 103/2024 issued on 19 September 2024, the VSV scheme will be implemented starting 1 October 2024.
The VSV scheme seeks to clear income tax dispute backlogs by allowing taxpayers to settle disputes pending as of 22 July 2024 by partially paying the disputed tax.
Taxpayers who declare by 31 December 2024 can use Form 1 to opt for a scheme with lower settlement amounts compared to those who file later.
Additionally, the CBDT has established the procedure for submitting a declaration and providing an undertaking in Form 1 as outlined in Notification No. 4 of 2024, dated 30 September 2024.
These rules detail the implementation of the VSV scheme, covering aspects such as:
- Definitions of key terms used in the VSV scheme (e.g., dispute, issues covered).
- Procedures for calculating disputed taxes.
- Amounts payable by declarants.
- Information that is required in Form 1 for submitting a dispute settlement declaration.
The CBDT has introduced the Direct Tax Vivad Se Vishwas Rules 2024 under Notification No. 104/2024 of 20 September 2024.
The Direct Taxes Vivad se Vishwas Scheme (VSV 2020) was first introduced in 2020. India’s Finance Minister Nirmala Sitharaman announced the second edition, the Direct Tax Vivad se Vishwas Scheme 2024 (VSV 2.0), during her Union Budget 2024 speech.
