VSVS related CBDT circular: A Short Overview
Introduction:
1. The Direct Tax Vivad Se Vishwas Scheme, 2024 has been enacted vide Chapter IV (Section 88 to 99) of Finance (No.2) Act, 2024. The Scheme is effective from 1st October’ 2024.
2. The scheme is applicable to disputes/appeals, including writs and special leave petitions (Appeals), whether filed by the taxpayer or the tax authorities are pending as on the specified date, i.e. 22 July 2024.
3. CBDT Circular No. 12/2024 provides essential guidance for taxpayers to settle their disputes under the DTVSV Scheme, avoiding prolonged litigation.
Some important guidelines in the circular, which were not discussed in my earlier write ups:
1. Sec 264:
A person who has filed an application for revision under section 264 of the Income Tax Act and such application is pending as on 22.7.2024, shall be applicable for the scheme.
2. Prosecution:
We cannot opt for the scheme where prosecution has been instituted on or before the date of filing of declaration. For example, a prosecution has been initiated for non payment of TDS and the case is also in appeals, opting for the scheme is not allowed.
3. Undisclosed income or search proceedings:
If a case pertaining to undisclosed income from a source located outside India or undisclosed asset located outside India, is lying in appeals, opting for the scheme is not allowed. Similarly, if the appeal is relating to an assessment year in respect of which an assessment has been made under section143(3)/ 144/ 147/ 153A/ 153C of the Income Tax Act on the basis of search initiated under section 132/ 132A of the Income Tax Act, opting for the scheme is not possible.
4. When Disputed Tax Includes Both Qualifying and Non-Qualifying Arrears, scheme cannot be opted:
If the disputed tax includes both qualifying and non-qualifying tax arrears, such as those related to undisclosed foreign income, the taxpayer is not eligible to apply for the Scheme for the entire dispute.
5. Computation of Disputed Tax in cases where loss or unabsorbed depreciation is reduced:
Option 1- Pay the tax, including surcharge and cess, payable on the amount by which loss or unabsorbed depreciation is reduced and carry forward losses/unabsorbed depreciation after ignoring such reduction.
Option 2– After considering reduction, Carry forward the reduced amount of loss or unabsorbed depreciation.
The written down value of the block of asset on the last day of the year, in respect of which unabsorbed depreciation has been reduced, shall not be increased by the amount of reduction in unabsorbed depreciation.
The copy of the order is as under:
