Context
The Government of India has announced the launch of Vivad Se Vishwas 2.0, a direct tax dispute resolution scheme set to commence on October 1, 2024. This initiative aims to streamline the resolution of income tax disputes, reduce litigation, and enhance taxpayer services.
Background of the Scheme
- Original Vivad Se Vishwas Initiative: The original Vivad Se Vishwas scheme was announced during presenting the Union Budget for 2020-21 and the main objective of the scheme was to effectively address the pending tax litigations. Unsurprisingly though, it proved a success, with around 1 lakh taxpayers availing themselves of the system, while the government was able to recoup close to ₹75,000 crores in unpaid revenues.
- Need for Vivad Se Vishwas 2.0: Vivad Se Vishwas 2.0 further expands the scope of the previous scheme to reap the similar success; it focuses on more extensive sets of disputes. Further, the second wave of the scheme has brought some more complex and high value cases, as against the approximately 2.7 crore direct tax disputes amounting to around ₹ 35 lakh crore.
Objectives of Vivad Se Vishwas 2.0
- Reduce Litigation: One of the main Objectives is to find a way of reducing the current outstanding tax disputes across different judicial levels.
- Enhance Taxpayer Services: It affirms the government’s resolve to demystify tax matters and enhance efficiency in the delivery of services to the taxpayer.
- Increase Revenue Collection: In so doing, the government aims at increasing the amount of money received and avoids long legal battles to achieve this end.
Eligibility Criteria
To participate in Vivad Se Vishwas 2.0, taxpayers must meet specific eligibility criteria:
- Pending Disputes: The scheme is for all those income tax disputes or appeals that were existing as on July 22, 2024.
- Types of Cases Covered:
- Litigation matters at the Supreme Court, High Court, ITAT and Commissioner/Joint Commissioner (Appeals)’s stage.
- Appeals that go to the Dispute Resolution Panel (DRP).
- Appeal applications containing cases awaiting the Commissioner of Income Tax’s ruling.
How the Scheme Works
The operational framework of Vivad Se Vishwas 2.0 allows taxpayers to settle their disputes with reduced liabilities:
- Settlement Process: The taxpayers can exhaust their pending cases by paying a lesser amount to their tax demands, which will save their time on court processes.
- Government’s Role: The government will keep guidelines and formats for the taxpayer to enable them to participate in the scheme which will be made available shortly.
Anticipated Impact
The introduction of Vivad Se Vishwas 2.0 is expected to have several positive outcomes:
- Faster Resolutions: Through the promotion of the settlements, the scheme is to ensure that the otherwise long processes of the discovery of the end of dispute through the courtroom is shortened.
- Increased Compliance: When the penalties and liabilities are reduced, the subjects will be more loyal to adhere to the requirements of the tax legislation.
- Strengthened Trust: The undertaking will also enhance the relationship between the taxpayers and the government by indicating willingness to solve the issues affecting them.
Conclusion
The beginning of a fresh series of the Vivad Se Vishwas 2.0 is a leap towards the contemporary framework of government infrastructure in India. Given the large number of cases handled and simplified processes as to taxpayers, the government’s goal of enhancing taxpayer services and improving revenue collection is well served by this initiative. While India is still on its path of becoming a developed nation and improving its taxation structure, Act of Vivad Se Vishwas serves an essential role in overcoming the goals as well as cutting down loads of litigation issues for both the taxpayers and judiciary systems.
Source: The Economics Times