Vivad Se Vishwas Scheme 2024: Key Highlights and Benefits
01 Dec, 2025
By Online Legal India
Published On 01 Dec 2025
Category Other
Tax disputes are a persistent challenge in India’s economic system and Taxpayers have been dealing with lengthy litigation cycles. The Vivad se Vishwas Scheme (VSV) aims to reduce this backlog. It is a dispute resolution initiative aimed at simplifying litigation. This scheme promotes an easier settlement of tax-related disputes. Read the blog to know the background and the objectives of the scheme.
The tax litigation in India was at an alarming level and then the Vivad se Vishwas Scheme came into action. The system is clogged with disputes pending at various stages. Tax disputes worth over Rs 9 lakh crore were pending across different forums and this data was presented during the announcement of the scheme.
Here we will discuss the consequences of these pending cases:
Note: Cases that involves minimal disputed tax amount will be resolved in a simpler way with this scheme. The Vivad se Vishwas Scheme is a strategic attempt and therefore it is addressing this challenge.
India’s direct tax litigation system is overburdened. There are lakhs of income tax cases pending at various appellate forums. There are many disputes that involve small amounts which require significant time and resources.
Note: This scheme is not the continuation of the earlier schemes launched in 2020 and 2023. However, the main aim of the Vivad se Vishwas scheme remains same. However, the structure and therefore the rules of the 2024 scheme are distinct.
The Direct tax Vivad se Vishwas scheme is only applicable for taxpayers who have direct tax disputes. These include:
Disputes resolved under this scheme are cases of direct tax, disputed interest, penalty and fees.
Cases should be pending before:
CIT(A), ITAT, High Court and Supreme Court
Note: It is also applicable for cases where an order has been passed, however the time for filing an appeal has not yet expired. The scheme covers dispute under the Income-tax Act, 1961 and therefore provide defined payment slabs mainly depending on the nature therefore stage of the dispute.
Unlike the earlier dispute resolution schemes, which used Forms 1–5, the DTVSV Scheme, 2024 uses only four forms:
After paying the amount stated in Form-2, then the taxpayer will have to file Form-3 within 15 days. Here, they will have to confirm:
Payment details, Challan information and Compliance with the guidelines of the scheme.
Once Form-3 is verified then the authority will issue Form-4, which:
Confirm the full, therefore, final settlement.
Ensures closure of the dispute
Prevents any reopening of the issue in subsequent proceedings and Important Deadlines given under the DTVSV Scheme, 2024.
Two key deadlines have been given by the CBDT and each is associated with different payment rates.
If a taxpayer is filling a declaration before 31st December 2024 will be eligible for lower settlement rates.
The benefit of this early window is that, it incentivizes faster participation in the scheme.
The Central Board of Direct Taxes (CBDT) has officially stated that 30 April 2025 is the final date for filing Form-1 declarations.
Declarations filed after the date 1st January 2025 will require payment at higher rates.
This two-tiered structure has similarities with earlier settlement schemes, but with its own specific percentages therefore timelines.
The DTVSV Scheme, 2024, has defined payment brackets therefore based on the following:
Below, we have provided a detailed analysis of the payment structure:
Payment will range between 100% to 120% of the disputed tax.
Situational Breakdown:
Appeals that are filed on or before January 31, 2020, therefore declarations that are filed before January 1, 2025, are considered as 100% of the disputed tax.
Payment will range between 25% to 35% of the disputed amount. Lower slab (25%) apply when the declaration is filed before December 31, 2024. On the other hand, higher slab (35%) will apply from the date of January 1, 2025, onwards. This is what makes early participation more attractive.
In case the appeal was filed by the tax department and the if the case was pending in a forum where a favourable ruling existed for the taxpayer therefore had not been overturned, there will be a 50% reduction on the payable amount.
For Example:
If the tax in a disputed penalty appeal filed by the department amount to Rs. 1,00,000 then the taxpayer will have to pay only Rs. 12,500 instead of Rs25,000 during the low-rate window.
Note: This provision will only acknowledge situations where the taxpayer was not the party initiating litigation.
The Direct Tax Vivad se Vishwas Scheme 2024 (DTVSV) makes the tax dispute resolution process simple, therefore transparent. Below are the steps that taxpayers should follow:
You will have to understand the nature of the dispute, the forum that is holding the case pending, the benefit of early settlement.
The form needs to include:
Remember that Filing Form-1 is the official entry point into the scheme.
The designated authority will issue the calculated settlement amount, payment instructions therefore the deadline for making the payment. This certificate is the basis for settlement.
Taxpayers need to pay the specified amount within 15 days of receiving Form-2. Missing this deadline will make the declaration invalid.
Form-3 notifies the authority that payment has been made. This form include details like the challan number, the payment date as well as the payment amount.
The authority will issue Form-4 therefore it confirms full therefore final settlement, closure of dispute therefore irrevocability of the settlement. The matter will settle after submission of the form.
The treatment of Vivad se Vishwas Scheme pending appeals differs by forum:
Automatically deemed withdrawn when Form-2 will be withdrawn and taxpayer will not have to file a separate withdrawal petition.
Taxpayer should formally withdraw the appeal. Before or after issuance of Form-4, proof of withdrawal will be required This distinction mainly respects judicial procedures at higher forums.
The Direct Tax Vivad se Vishwas Scheme (DTVSV), 2024 offers certainty. Once a dispute is settled no further proceedings will be there on the same issue. Therefore, the matter will never reopen by the income tax department. In result, the tax payer will get peace of mind in the long run. This is beneficial for businesses who are facing repeated litigation on recurring issues.
Remember that legal battles are always expensive. It involves fees for representation, documentation, follow-ups and opportunity costs. On the other hand, settling disputes can help in reducing these expenses.
Traditional appeals take years after years. On the other hand, Vivad se Vishwas Scheme offer a certificate in 15 days. A proper settlement order within one month.
The scheme is financially extremely attractive. This is because it offers reduced payment slabs, especially for interest, penalties and fees. Therefore, businesses can clear up funds for operations instead of holding them for contingent liabilities. Therefore, this scheme helps in cash flow relief.
In case of litigation, verdicts are uncertain. On the other hand, the scheme provides clearly defined formula-based settlement amounts.
Traditional disputes will settle.
Examples to Illustrate Settlement Calculations
Here we are providing examples that are illustrating settlement calculations
Example 1: Disputed Tax (Early Declaration)
For instance, consider that Disputed tax is Rs. 2,00,000
Appeal filed before January 31, 2020
Declaration filed before December 31, 2024
Then Payable amount = 100% of disputed tax = Rs. 2,00,000
Example 2: Disputed Penalty (Late Declaration)
For instance, consider that Disputed penalty: Rs. 3,00,000
Declaration filed after January 1, 2025
Then Payable amount = 35% of Rs. 3,00,000 = Rs. 1,05,000
Example 3: Departmental Appeal
For instance, Disputed interest: Rs. 1,50,000
Appeal filed by the tax department
Declaration filed before December 31, 2024
Reduced rate: 25% × 50% = 12.5%
Then the Payable amount will be RS. 18,750
The Indian economy is expanding. The government is aiming to create a business-friendly environment. However, litigation is creating uncertainty for both businesses and investors:
Helped in reducing the number of pending appeals and Increases the government revenue without coercive action
Helps in building trust between taxpayers and tax authorities
Conclusion
The Vivad se Vishwas Scheme is a milestone in India’s tax administration. Since it has benefitted taxpayers, the government, and therefore the overall economy by providing a transparent, efficient, therefore trust-oriented process for resolving disputes. This scheme reduced the litigation burden, unlocked revenue, and therefore advanced the commitment of the Government towards building a fair therefore transparent tax system.
It is a government initiative to settle pending direct tax litigation. This scheme offers certainty to taxpayers, therefore generating government revenue. Therefore, we can say that the reform 2024 scheme mainly aims at addressing income tax disputes.
The scheme is applicable for cases where appeals, writ petitions or SLPs dealing with disputed income tax, interest, penalty or fees were pending before the appellate forum from July 22, 2024. However, cases with pending revision applications before the commissioner are also covered.
Taxpayers can electronically file a declaration, therefore undertaking in Form-1 on the e-filling portal of the income tax department. For each dispute, one will have to give a separate Form - 1
The deadline for submitting declarations Form-1 is April 30th 2025. However, one will have to make the payment within 15 days after receiving the certificate in Form-2 from the designated authority.
Disclaimer: This article is for informational purposes only therefore does not constitute legal advice. Online Legal India is not a law firm therefore does not provide legal representation.
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