Vivad se Vishwas 2.0 (2024)
Vivad se Vishwas 2.0 is the direct tax dispute resolution scheme announced in Union Budget 2024-25 and operationalised by the Finance (No. 2) Act, 2024, allowing taxpayers with pending appeals before CIT(A), ITAT, High Courts, and the Supreme Court to settle tax disputes by paying a specified amount of disputed tax with full waiver of interest and penalty.
Vivad se Vishwas 2.0 (VSV 2.0) is the second iteration of a landmark dispute resolution programme, following the success of the original Vivad se Vishwas scheme introduced in 2020 that resolved approximately 1.48 lakh disputes and collected over Rs. 54,000 crore. The 2024 scheme was necessitated by the persistent and growing inventory of appeals at various forums, with lakhs of cases pending before CIT(A) alone.
Under VSV 2.0, taxpayers with disputes pending as on 22 July 2024 (the date of introduction of the Finance Bill) at any forum — Commissioner of Income Tax (Appeals), Dispute Resolution Panel (DRP), Income Tax Appellate Tribunal (ITAT), High Courts, or the Supreme Court — are eligible to participate. Both taxpayer-initiated appeals and department-initiated appeals are covered.
The settlement amount depends on the nature of the dispute and the timing of the declaration. For taxpayer appeals involving disputed tax, the payment required is 100% of the disputed tax if a declaration is filed on or before 31 December 2024, rising to 110% thereafter. For department-initiated appeals, the rates are lower — 75% and 85% respectively — reflecting the asymmetric risk. In both cases, interest and penalty attributable to the disputed amount are fully waived, which is often the most significant financial benefit for taxpayers.
Particular categories attract different treatment. For disputes involving only disputed interest, penalty, or fees (with no disputed tax), the rates are 25% (on or before 31 December 2024) or 30% (after), making settlement very attractive. Disputed TDS defaults have their own rate structure. The scheme does not apply to cases involving undisclosed foreign income, prosecution proceedings, or cases already settled under the original VSV scheme.
The process involves filing a declaration in Form-1 on the income tax portal, receiving a certificate (Form-2) from the Designated Authority within 15 days, paying the specified amount, and obtaining a final order in Form-3. Upon full payment and issuance of Form-4, the dispute is treated as settled with full immunity from further interest, penalty, and prosecution. VSV 2.0 is particularly valuable for resolving long-pending disputes where the interest and penalty accumulation has dwarfed the original tax demand.