Vivad Se Vishwas Scheme

What is the Vivad Se Vishwas Scheme?

Vivad Se Vishwas is a dispute resolution scheme introduced by the Indian government to settle pending tax disputes. The primary goal of this scheme is to reduce the burden of litigation on both taxpayers and the tax authorities. Under this scheme, taxpayers can opt to settle their tax disputes by paying a certain percentage of the disputed amount, thereby avoiding lengthy legal proceedings. This initiative aims to improve taxpayer compliance, enhance revenue collection, and create a more conducive business environment in the country.

Eligibility Criteria of Vivad Se Vishwas Scheme

The Vivad Se Vishwas scheme offers relief to MSMEs affected by contractual disputes with government departments and public sector entities. To be eligible for this scheme, an MSME must fulfill the following conditions:

• MSME Registration: The supplier or contractor should have been registered as an MSME with the Ministry of MSME as of March 31, 2022.

• Contract Period: The original contract for the procurement of goods or services should have been entered into between February 19, 2020, and March 31, 2022.

How to File Declaration Under the Vivad Se Vishwas Scheme?

Step 1: Fill Out Form 1

• Complete Form 1 to file a declaration with the designated authority under the Vivad se Vishwas Scheme.

• Once you file this declaration, any ongoing appeal before the Income Tax Appellate Tribunal or Commissioner (Appeals) concerning disputed income, interest, penalty, or fee will be considered withdrawn from the date you receive a certificate from the designated authority.

Step 2: Withdraw Appeals and Provide Proof

• If you have filed any appeal before the appellate forum or any writ petition before the High Court or the Supreme Court, withdraw these appeals and provide proof of the withdrawal.

Step 3: Submit Form 2

• File an undertaking in Form 2, relinquishing your right to seek any remedy or claim regarding the tax arrear.

• Ensure that both Form 1 and Form 2 are verified and signed by you or a competent person on your behalf as per Section 140 of the Income Tax Act.

• You will receive an acknowledgement in Form 3 from the designated authority after they receive your declaration.

Step 4: Provide Payment Details in Form 4

• After receiving the certificate from the designated authority, provide details of the payment in Form 4.

• Include proof of withdrawal of appeal, objection, application, or writ petition in the form.

Step 5: Receive Acknowledgement in Form 5

• Upon completing the payment, you will receive an order (Form 5) from the designated authority acknowledging the receipt of your payment.

Why Has the Vivad se Vishwas Scheme Been Launched?

In the previous union budget, the "Sabka Vishwas" scheme was launched to decrease the number of indirect tax cases, successfully resolving over 1.89 lakh cases. Building on this success, the "Vivad se Vishwas" scheme has been introduced to reduce the backlog of direct tax litigation cases. Currently, 4.83 lakh direct tax cases are pending across various appellate forums, such as the Commissioner (Appeals), Income Tax Appellate Tribunal (ITAT), High Courts, and the Supreme Court. The scheme aims to resolve many of these cases.Moreover, amendments to the Income Tax Act have been proposed to introduce "Faceless Appeals" (e-appeals), similar to the recently implemented "Faceless Assessment" (e-assessment), to improve transparency, efficiency, and accountability.