The pendency of litigation at various levels has been on the rise due to a larger number of cases going for appeal than the number of disposals
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Mrinal Pal
The Income Tax Department has set the date of April 30 as last date for a declaration in respect of tax arrears under the Direct Tax Vivad se Vishwas Scheme, 2024. The scheme aims to reduce income tax litigation by allowing taxpayers to settle pending appeals, writs, and petitions before various appellate authorities, including the Supreme Court and High Courts, as of July 22, 2024.
The Central Government hereby notifies under the Direct Tax Vivad se Vishwas Scheme, 2024, the 30th day of April, 2025, as the last date, on or before which a declaration in respect of tax arrear shall be filed by the declarant to the designated authority,” the Central Board of Direct Taxes (CBDT) has said in a notification.
The second edition of the Direct Tax Vivad se Viswas scheme 2024 (VSV 2.0) was made operational from October 1, the Finance Ministry has said in a notification. The scheme was announced in the budget of Fiscal Year 2024-25 to reduce the litigations related with income tax. According to the budget document, the scheme provides for a mechanism of filing of appeals against orders passed under the proceedings of the Act, both by the taxpayer and the Department before respective appellate fora, such as Joint Commissioner of Income-tax (Appeals), Commissioner of Income-tax (Appeals), the Income-Tax Appellate Tribunal, High Courts and the Supreme Court.
“It has been the endeavour of the Central Board of Direct Taxes to provide expeditious disposal of appeals by appellate authorities under its administrative control,” the explanatory memorandum said. One such measure was the Direct Tax Vivaad Se Vishwas Act, 2020 (VSV 1.0), launched for appeals pending as of January 31, 2020. The scheme got a very encouraging response from the taxpayers and also garnered substantial revenue for the government.
The pendency of litigation at various levels has been on the rise due to a larger number of cases going for appeal than the number of disposals. “Keeping in view the success of the previous Vivaad Se Vishwas Act, 2020 and the mounting pendency of appeals at CIT(A) level, introduction of a Direct Tax Vivad se Vishwas Scheme, 2024 is proposed with the objective of providing a mechanism of settlement of disputed issues, thereby reducing litigation without much cost to the exchequer,” the memorandum said.
According to consultancy firm Deloitte, before VSV 1.0, there were 483,000 direct tax appeals pending across various forums, with ₹4.96 lakh crore in tax amounts locked. The said scheme successfully resolved over 1.46 lakhs (30 per cent) of these appeals, resulting in ₹0.54 lakh crore (11 per cent) in collections for the government. The government forgave ₹0.45 lakh crore in taxes under this scheme. Further, it said that to be eligible under VSV 2.0, cases must be pending as of the cut-off date of July 22, 2024.
The scheme allows taxpayers to settle appeals, writ petitions, and special leave petitions pending as of this cut-off date before the Supreme Court, High Courts, ITAT, Commissioner (Appeals), and Joint Commissioner (Appeals). The scheme also covers cases with objections filed before the Dispute Resolution Panel (DRP) where no final assessment order has been issued and pending revision applications before the Commissioner, the firm said.
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Published on April 9, 2025