circular no. 12/2024 guidance note 1/2024 on provisions of the direct tax vivad se vishwas scheme 2024

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s. F. No. 370142/2212024 -TI'L Government of India M inistry of F inance Department of Revenue Circular No. 12 of 2024 Central Board of Direct Taxes ****************************************** Dated' \~ctober 2024 . , Sub.: G uidance Note 1/2024 on provisions of the Direct Tax Vivad se Vishwas Schem e, 2024 - reg. The Direct Tax Vivad Se Vishwas Sehcme, 2024 (hereinafter referred as OTVSV Scheme, 2024) has been enacted vide Chapter IV of Finance (No.2) Act, 2024 to provide for dispute resolution in respect of pending income tax litigation. The objective of the Scheme is to, inler alia, reduce pending income tax litigation, generate timely revenue for the Government and benefit taxpayers by providing them peacc of mind, ccrtainty and savings on account of timc and resources that would otherwise be spent on the long-drawn and vexatious litigation process. 2. The eommcneemcnt date of thc said Scheme has already been noti fled as 1.10.2024. Further, Rules and Forms f()t· enabling the Scheme have also been notified on 20.09.2024. After enactment of the DTVSV Scheme, 2024, several queries were received from the stake-holders seeking guidance in respect of va rio LIS provisions contained therein. 3. Accordingly, under Section 97 of the OTVSV Scheme, 2024 which empowers the Board to issue directions or instructions in public interest, following Guidance Note in the form of answers to the frequently asked questions (FAQs) is hereby issued. This will be helpful for the tax-payers for creating better awareness and understanding with respect to the provisions of the Scheme. Issue Comments No. Elioible cases I Which appeals arc covered under Direct Tax Vivad Sc Vishwas Scheme, 2024 ? - - Please refer to section 89 of the Direct Tax Vivad Sc Vishwas Scheme, 2024 ('the DlVSV Scheme, 2024' or 'the Scheme') [contained in Chapter IV of the Finance (No.2) Act, 20241. Section 89 of the Scheme provides for the definition of "appellant" which is - (i) a person in v.lhosc case an appeal or a writ petition (WP) or special leave petition (SI.P) has been filed either by him or by the income-tax authority or by both, before an appellate forum and such appeal or petition is pending as on the specified date i.e. 22.7.2024; or (ii) a person who has filed his objections before the Dispute Resolution Panel (DRP) under section 144C of the Income-tax Act, 1961 ('the Act') and the DR? has not issued any direction on or before 22.7.2024; or (iii) a person in whose case thc DRP has issued direction under section 144C(5) of the Act and the AO has not completed the ,_ ~sessment under section I 44C(I3Lon or beforel:ZJ.2024; ~ Page 1 of 9 Non-elicible cases 2 Which cases arc 1101 covered under DTVSV Scheme 2024? Rates 3 Kindly provide the amount payable on the tax arrears as per the DTVSV Scheme, 2024? -- , -~------~~~~C (iv) a person who has filed an application for revision under section 264 of the Act and such application is pending as on 22.7.2024. f',.s p-"LseJ;tiQll 9~ of the Sehen1£,Jhe Se_heme shall not, inter- alia, am21y in resReet of tax arrcar,- (i) relating 10 an assessment year 111 respect of which an assessment has been made under section 143(3)1I4411471153MI53C of the Act on the basis of search initiated under section 1321132A of the Act; (if) relating to an assessment year 1Il respect of which prosecution has been instituted on or before the date of filing of declaration; Uii) relating to any undisclosed income from a source located outside India or undisclosed asset located outside India; (iv) relating to an assessment or reassessment made on the basis of information received under an agreement referred to in section 90 or section 90A of the Act, if it relates to any tax arrear. There are certain other cases where provisions of COFEPOSA Act, 1974; UAPA Act, 1967; NDPS Aet 1985; P13PT Act, 1988; PC Act, 1988; PMLA 2002 etc. may apply. Such cases are also not covered in the Scheme. For further details, refer section 96 of the Scheme. Table-l S - Nature of tax Amount No. arrears payable where declaration made on before 31.12.2024 or Amount payable where declaration made on after 1.1.2025 before date or & last Tax arrears include 1000/0 disputed tax, interest, disputed lax of 110% of penalty (New __ -"l'pellant) . ___ ~ _. _ 2 Tax arrears include 110o/u disputed tax, interest, disputed tax penalty (Old disputed tax of 120% of disputed tax ___ -"p pell a'!.!t _ _ _ --:c- _ _. -:-t-:-:::-.,----_::_ 3 Tax arrears related to 25% of 30% of disputed interest/ disputed penalty/ fee (New interest/ __ --"Pp<:!lant) __ __ penalty/~ 4 Tax arrears related to 300/u of disputed interest! disputed penalty/ fcc (Old interest! appellant) _ _ _ p~nalty/ fee __ disputed interest! penalty/ fce 35% of disputed interestl penalty/ fee Page 2 of 9 Types of Forms and Timelines 4 What arc the vanous Forms speei fied in the Scheme? --------~ • Where an appeal/writ petition/SLP is filed by the ineome- tax authority on any disputed issue, the amount payable shall be 50% of the amount payable specified in the Table above. • Where an appeal IS Gled by the appe llant before the Commissioner (Appeals)/Joint Commissioner (Appeals) or objections arc filed before the Dispute Resolution Panel on any issue on which he has already got a decision in his favour from the ITAT (where the decision on such issue is not reversed by the High Court or the Supreme COUrl) or the Iligh Court (where the decision on such issLle is not reversed by the Supreme Co Uri), the amount payable shall be 50% of the amount payable specified in the Table above. • Where an appeal is filed by the appellant on any issue before the ITAT on which he has already got a decision in his favour from the lIigh Courl (where the decision on such issue is not reversed by the Supreme Court), the amount payable shall be 50% of the amount payable speei fied in the Table above. Four separate Forms have been notified for the purposes of the said Scheme. These arc as under: Furm-l : Form for filing declaration and undertaking by the declarant Furm-2: Form for Certificate to be issued by Designated Authority Furm-3: Form for lntimation of payment by the declarant Furm-4 : Order for Full and Final Settlement of tax arrears by Designated Authority • The Scheme also provides that Form-I shall be filed separately for each dispute, provided that where appellant and the income-tax authority, both have filed an appeal in respect of the same order, single Form-I shall be filed in such a case. • The intimation of payment is to be made in Form-3 and is to be furnished to the Designated Authority alongwith proof of withdrawal of appeal, objection, application, writ ::-- __ ----;---,---c---:--f---1l-:- J ctition, special leave petition or claim. 5 What arc the vanous timciines Variolls timclines specified in the Scheme arc as follows: speei fied in the Scheme') (i) Declaration and Undertaking shall be filed by tax payer in Form-Ion or before 31.12.2024 to keep the amount payable on the lower threshold. In case of filing the declaration and undertaking beyond 31.12.2024, amount payable will increase as (i i) (iii) - speei fied in rates Table- I above. The Designated Authority shall issue F01111-2 within a period of fifteen days from the date of receipt of the declaration to determine the amount payable by the taxpayer. Thc tax-payer shall pay the amount as determined in Form-2 within a period of fifteen days from the date of receipt of the certificate, and shall intimate the details ofsueh l'."yrr,-e".n",t -,-il", , -,-r·-,- ·o'.'.r~mo.-,, 3 ,- . _____ 1 Page 3 of 9 Search assessments 6 Kindly clarify which assessmcnts shall be considered to have bcen made on the basis of search initiated under section 1321132A of the Act? Rollback years 7 A taxpayer is evaluating to close few years 111 DTVSV Scheme, 2024 out of 4 rollback years. Whether Advance Pricing Agreement can be pursued for remaining years of the 4 rollback years? Anneal disposed off 8 Suppose a taxpayer is eligible to apply for DTVSV Scheme, 2024 _ _as his_ appeal is pc.~ding as on - (iv) Upon receipt of Form-3, Designated Authority shall pass an order in FormA stating that the tax- payer has paid the full and onal amount. Assessments framed under section 153A or 153C are clearly made on the basis nf search initiated uls 1321132A. Therefore, slleh cases shall not be eligible for the DTVSV Scheme, 2024. For other cases where assessments have been made U/S 143(3)1144/147, following three sets of cases shall be considered as cases where assessments have been made on the basis of search initiated uls 132/132A. These cases arc:- (i) Where a search is initiated lInder section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the I st day of April, 2021 , in the case of the assessee and assessments have been made consequently; or (ii) Where the Assessing Officer has drawn satisfaction, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the I st day of April, 2021, belongs to the assessee and assessrnents have been made consequently; or (iii) Where the Assessing Officer has drawn satisfaction, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the I st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee and assessments have been made consequently. As per e llDT Circular 15/2015 dl. 10.6.2015- "The applicant does not have the option 10 choose the years jor which it wants /0 apply for rollback. 711e applicant has to either apply/or alllhefour years or not apply at all. I rowever, if the covered international transaclion(.\) did not exisl in a rollback year or there is some disqualification in a rollback year, then [he applicant can apply for rollback for less than jOllr years. " Thus, in certain exceptions, the rollback period could be less than 4 years also. On the same analogy, if few ycars arc settled in the Scheme, the rollback can be applied for the remaining years. The DTVSV Scheme, 2024 is a Scheme for settlement of tax disputes. Where a decision has been given prior to the taxpayer filing .!!. ~elarat i o~l, tller"i'-.!'2 di3"!~pending unless the Page 4 of 9 22.7.2024 . But subsequently, taxpayer or the Department again prefers an appeal. Therefore, before the taxpayer could file where an appeal is pending as 011 22.7.2024 but is not pending declaration under the DTVSV as on the date of making declaration under the Scheme, such Scheme, 2024, his appeal has cases shall not be eligible for the Scheme. been disposed ofr. Can such a taxpayer still fi Ie declaration llowcvcr, in cases where a taxpayer files declaration under under the Scheme? section 90 of the Scheme and intimates the same to the appellate authority, the concerned appellate authority may - - consider not di sposing~peal of the taxpayer. Time limit to file appeal not expired on 22.7.24 9 FXlanl provisions of DTVSV As per seetion 89(1) of the Scheme, it is clear that the appeal Scheme, 2024 does 1101 covcr has to be pending as on the specified date i.e. 22.07.2024 for cases where Taxpayer would have an appellant to be eligible for the Scheme. The definition of received orders but the lime limit appellant also covers cases where the DRP has issued to file an appeal I special leave directions u/s 144C(5) but the AO has not completed the petition had 110\ expired as on 22 assessment uls 144C( 13). July 2024. Is there any possibility that slIch cases can be covered in Therefore, the Scheme does not provide for eligibility of those the Scheme? cases where an appeal is not pending as on 22.7.2024 except for DRP cases referred above. SettlinQ iss ues in Dar t 10 Where disputed tax contains As per section 91 (2) of the Scheme, alicr filing of declaration, qualifying tax arrears along-with appeals before ITArl en(A)1 JeIT(A) arc deemed to be non-qualifying tax arrears (such withdrawn from the date of issue of cerli ficate by the as, tax aITcars mentioned 10 Designated Authority. Further as per section 91(3) of the section 96(a) for eg. tax arrear in Scheme, the taxpayer IS required to withdraw appeals and respect of undisclosed foreign furnish proof thereof along with intimation of payment uls income), whether the taxpayer can 92(2) of the Schcme. apply for the Scheme in such a Therefore, the Scheme docs not envisage settling issue in case? part. The dispute has to be settled in full as per the Scheme. Thus, where there arc non-qualifying tax arrears, slich disputes arc 1101 eligible to be covered under the Scheme. Scttline penalty appeal while qu antulll am cal oendinj! 11 Can a taxpayer settle penalty Reference may bc made to section 89(1 )(i) of the Scheme, appeal while continuing to litigate which provides the definition of 'disputed penalty' . It provides the assoc iated quantum appeal? that the disputed pcnalty is such penalty which is not levied or leviable in respect of disputcd income or disputed tax. Thus, it would not be possible for the appellant to apply for settlement of penalty appeal only, when the appeal on disputed tax related to such penalty is still pending. If both quantum appeal covenng disputed tax and appeal against penalty levied on such disputed tax for an assessment year are pending, the declarant is required to file a declaration form giving details of both disputed tax appeal and penalty appeal. IIowever, he would be required to pay relevant percentage of disputed tax only. P rotective & Substa nti ve additions 12 If there is substantive addition as Where substantive as well as protective additions have been well as protective addition in the made whether In the case of same taxpayer for different case of same assessee for different assessment years or in the hands of different taxpaycrs, then assessment year, how will that be either of the two additions i.e. substantive or protective can be co vered? ~imilarly,_ if there is _ --,cttled if the substantivc addition iLeligible ..i~._ settlc~ -- ._- - - - Page 5 of 9 substantive addition in case of one under the Scheme. assessee and protective addition on same issue In the case of On settlement of dispute related to substanti ve or the protective another assessee, how will that be addition, AO shall pass rectification order deleting the covered undcr DTVSV Schcme, protective or the substantivc addition, as the case may be, 2024? relating to the same issue in the case of the same taxpayer or in the case of another taxpayer. Disputes relatin{! to other direct-taxes 13 Are disputes relating to wealth No. Only disputes relating to income-tax arc covered. tax, security transaction tax, commodity transaction tax and equalisation levy covered? ReQuest for withdrawal of appeal made 14 If a taxpayer has requested for Where assessee has made request for withdrawal and such withdrawal of appeal under request IS under process, proof of request made shall be section 91 (3) of the Scheme and enclosed. the appeal is not yet allowed to be withdrawn, how will the taxpayer furnish proof of withdrawal m such cases? ~ - - -- - - -- Interest waiver applications 15 With respect to interest under A taxpayer who has filed a waiver application is not an section 234A, 234 1l or 234C, appellant u/s 89( I lea) of the Scheme. Therefore, such cases are there is no appeal but the assessee not covered. has filed waiver application before the eompetcnt authority which IS pending as on 22.7.2024'1 Will such cases be covered under the Scheme? - - - - - - Enhancement notice 16 Ir JCIT(Appeals)/ ClT(Appeals) Yes. Where an appeal is pending before the JClT(A)1 CIT(A), has given an enhancement notice, the disputed tax is the amount that is payable by appellant if can the appellant avail the such appeal was to be decided against the appellant. This is as DTVSV Scheme, 2024 after per the definition of 'disputed tax' in s. 89(I)U) of the DTVSV including proposed enhanced Scheme, 2024. Hence, where JCIT(A)/ CJT(A) has given l11come m the total assessed enhancement notice, the taxpayer can avail the Scheme after income? including proposed enhanced income III the total assessed income. J\ppropriate calculation of disputed tax is accordingly provided in the relevant Schedules of Form- I. Refund issues 17 Whether taxpayers can sellie As per section 92(2) of the Scheme, the declarant shall pay the appeals under DTVSV Scheme, amount determined under section 92( 1) of the Scheme within a 2024 using the refunds which they period of fifteen days of the date of receipt of the certificate arc expecting from the and intimate the details of such payment to the Designated department? J\uthority in the prescribed form and thereupon the Designated Authority shall pass an order stating that the declarant has paid the amount. There is no provision in the Scheme ailowing payment of the amount determined uls 92(1) of the Scheme through - . - -- -- ----- - _a,<ljustment or any refund expect"cI 1'£.0111 the Qslartmenl. 18 If taxes arc paid after availing the No. J\ny amount paid in pursuance of a declaration made under benefits of the DTVSV Scheme, the Scheme shall not be refundable under any circumstances as 2024 and later the taxpayer per provisions of section 94( I) of the Scheme. decides to take refund of these taxes paid, would iljJ£jJossibIeZ ____ Page 6 of 9 -- -- - - - ---- TDS/TCS issues 19 Will delay in deposit of TDSITCS The disputed tax includes tax related to tax deducted at source be also covered under the ('IDS) and tax collection at source (TCS) which arc disputed Scheme? and pending in appea l. lIowever, if there is no dispute related to TDS or TCS and there is delay in depositing such TDS/TCS, then the dispute pending in appeal related to interest levied due - --- - l- to such delaY will be C<J~en,d under the Scheme. 20 Where assesses settles TDS Yes. IIowever, the credit will be allowed as on the date of appeal (against order uls 20 I of settlement of dispute by the deduetor and hence the interest as the Act) as deduct or of TDS, will applicable to deduetee shall apply. cred it or such lax be allowed to dcductcc? - I- --- -~ --- 21 When assessee settles his own Yes. In such a case, the dcductor in default would not be appeal under DTVSV Scheme, required to pay the corresponding TDS amount. I lowe vcr, he 2024, will consequential relief be would be required to pay the interest under sub-section (IA) of available to the dcductor In section 20 I of the Act. If such levy of interest under sub- default from liability determined seetinn (I A) of section 201 of the Act qualifies for DTVSV under TDS order uls 20 I of the Scheme, 2024, the deduetor in default can settle this disputed Act? interest b~ filing up the relevant schedule of disputed interest. Consequential relief u/s 40(a)(i)/(ia) 22 Where assessee settles TDS In such cases, the dedlletor shall be entitled to get liability as deduetor of IDS under consequential relief or allowable expenditure under proviso to DTVSV Scheme, 2024 (ie. section 40(a)(i)/(ia) of the Act in the year in which the tax was against order u/s 201). when will required to be deducted, if the disallowance under section he get consequential relief of 40(a)(i)/(ia) of the Act is with respect to same issue on which expenditure allowance under order under section 201 has been issued. proviso to section 40(a)0)IOa) of the Act? 1lowcvcr, if the assessee has already claimed deduction of the same amount under section 40(a)(i)/(ia) of the Act 111 subsequent year on account of recovery of TDS 111 such subsequent year, he shall not be entitled to consequential relief under section 40(a)(i)/(ia) of the Act on the basis of the settlement under DTVSV Scheme, 2024. In case, in the order under section 143(3) there arc other issues as well, and the appellant wants to settle the dispute with respect \0 order under section 143(3)01' the Act as well, then the disallowance under section 40(a)0)IOa) of the Act relating to the issue on which he has already settled liability under section 201 of the Act would be ignored for calculating disputed tax . Re2istration " Is 12AA 23 A trust has been denied No registration uls 12AA of the Act. Whether appeal against such order IS eligible for DTVSV Schcme, 2024? Set-aside matters 24 An order has been set aside, fully According to the Schcme, an appeal which is pending as on or partially, to the 1\0. Can the 22.7.2024 shall be eligible for settlement. A set-aside matter to taxpayer avail the DTVSV the AO is not an appeal pending as such. Therefore, set-aside Scheme, 2024 if the set-aside matters to the A(), whether fully set-aside or partially set-aside matter IS pending as on are not covered under the Scheme. 22.7.2024'1 - - - '- - - - -- - -- - --- ---. - - - - Page 7 of 9 .~ ~ --- --- - - -- Two aDDeals for one A Y in reSDect of the same order 25 Where there arc two appeals filed Yes. The appellant has an option to opt for settling appeal filed for 3n assessment year in respect by him or appeal med by the department or both. This has to of the same order - one by the be specified in the declaration to be made in Form- l . Also refer appellant and one by the lax to the proviso to Rule 4 of the Direct Tax Vivad se Vishwas department, whether the appellant Rules, 2024 whieh is reproduced as under:- can opt for only one appeal? !low "where the appel/ant and the income-fax authority have both would the disputed tax be .filed an appeal or writ pel ilion or .\pecia/ leave pel ilion ;11 computed in such a cases? respect of the same order, single Form- I shall be/iled by the appel/ani. " Accordingly, relevant Schedules in Form- I have to be filled out by the appellant and the disputed tax would be worked out. Writ on 148/J48A notice 26 [f a writ has been filed against a The income in sLich cases is yet to be determined. Therefore, notice issued under section 148/ the disputed tax is not ascertainable. Thus, the taxpayer would 148A of the Act and no not be eligible For the Scheme in such cases. assessment order has been passed consequent to that notice, whether such cases are eligible under the Scheme? Anneal before HC/SC vet to be admitted 27 If appeal IS filed before Iligh Yes. Court or Supreme Court and IS pending for admission as on 22.7.2024, whether the case is eligible for DTVSV Scheme, 2024'1 Cross obiections & MA 28 Whcther cross objections filed Yes. and pending as on 22.7.2024 will - 31so Qe covered by the Sehem"L _ --- - ~---~ 29 Whether Miscellaneous No. MI\ is not an appeal. Therefore, thcre is no pending appeal Application (MA) pending as on as on 22.7.2024. 22.7.2024 will also be covered by the Scheme? Assessment order staved bv HC/SC 30 Whether the DTVSV Scheme, No. A quaotum appeal pending on 22.7. 2024 can be settled 2024 can be availed 111 a case under the Scheme. Where an assessment order has been stayed, where the enforceability of an it docs not tantamount to an appeal pending as on 22.7.2024. assessment order passed by 1\0 has been stayed by the Iligh Court or Supreme Court? Other issues 31 The assessment order under The appellant in this case has an option to settle either of the section 143(3) of the Act was two appeals or both appeals for the same assessment year. passed in the case of an assessee for an assessment year. The said As per rule 4(1) of the Direct Tax Vivod se ViS!JWClS Rules, assessment order is pending with 2024, the declaration shall be filed separately in respect of each ITAT. Subscquently another order order. Therefore, if a taxpayer decides to settle both appeals under section 1471143(3) was then he has to file separate declaration for the two orders. passed for the same assessment year and that is pending with CIT (Appeals)? Could both or one of the orders be settled under _rnvs\i S~hen,-e, 2 0~~ -~ ~~ -- -~- --- ~ - Page 8 of 9 32 There is no provision for 50% concession in appeal pending in lie on an issue where the assessee has got relief on that iss lie from the ~prel11c _Court? 33 Addition was made uls 143(3) on two issues whereas appeal is filed only for one addition. Whether interest and penalty be waived for both additions. 34 Once declaration is flied under nTVSV Scheme, 2024 , and for financial difficulties, payment is nol made accordingly, will the declaration be null and void? -.~ ~- -- - 35 Whether the immunity from prosecution IS only for the declarant or also for the Director of the company or partner of the firm with respect 10 the disputes settled under DTVSV Scheme, 2024? Copy (0 : If Ihe appellant has gal decision in his favour from Suprcmc Court on an issue, there is no dispute now with regard to that issue and he need not settle that issue. If that issue is part of the multiple issues, the disputed tax may be calculated on other ~les considering !].il tax ~ Ihis issue. __ ~~_ -0-,----:-;:--;---1 Under nTVSV Scheme, 2024 interest and penalty will be waived only in respect of the iss lie which is disputed in appeal and for which declaration is filed . lienee, for the undisputed issue, the tax, interest and penalty shall be payable. Yes. As per provisions of section 91 (5) of the Scheme, it shall be dccmed as if the declaration has not been made. If a dispute has been settled under the Scheme, the immunity from prosecution with respect to that dispute shall also extend to the director I partner of company I firm (being the declarant) in respect of same dispute under section 27813 of the Act. -- ---- --- -~~..-----:---' (Surbcndu Thakur) Under Secretary to the Govt. of India I. PS to FMI OSD to FMI PS to MoS(F)! OS!) to MoS(F) 2. OSD to Secretary (Revenue) 3. Chairman, CBD'!' & All Members, CBDT 4. All PI'. DGslTI PI'. CCslT 5. All Joint Seeretaries/CsIT/ Directors! Deputy Secretaries/ Under Secretaries ofCBDT 6. The C&AG or India 7. The lS & Legal Adviser, Ministry of Law & Justice, Ncw Delhi 8. CIT (M&TP), OrGcial Spokesperson or CllDT 9. Wcb Manager, A DG(S)··11 , % Pr. DGIT (Systems) for uploading on official websitc. 10. lCIT (Database Cel!) for uploading on www.irsoffiecrsonline.gov.in Page 9 of 9