The Direct Tax Vivad se Vishwas Act, 2020
The Direct Tax Vivad se Vishwas Act, 2020 was introduced by the Government of India to resolve pending income tax disputes in a speedy and taxpayer-friendly manner.
It is part of the government’s efforts to reduce litigation in direct taxes and boost trust between taxpayers and tax authorities.
📘 Objective of the Act
To settle direct tax disputes and reduce the burden of litigation by offering taxpayers an opportunity to pay disputed tax amounts with full or partial waiver of interest and penalties.
🗓️ Key Dates
| Event | Date |
|---|---|
| Introduction in Lok Sabha | 5 February 2020 |
| Enactment (President's assent) | 17 March 2020 |
| Scheme operational from | 17 March 2020 |
| Original last date for availing | 31 March 2020 |
| Final extended deadline | 31 March 2021 |
📊 Summary Table: Key Features
| Aspect | Details |
|---|---|
| Purpose | Resolve pending direct tax disputes quickly and amicably |
| Who can apply | Taxpayers with pending appeals (as on 31 Jan 2020) before any appellate forum |
| Eligible disputes | Disputes related to income tax, including penalty, interest, and fees |
| Scheme benefit | Waiver of interest and penalty on full/partial payment of disputed tax |
| Payment structure | Lower amount payable if paid before a certain date |
| Applicable authority | Income Tax Department |
| Disqualification | Cases involving undisclosed foreign income/assets, or those under PMLA, etc. |
💸 Payment Terms Under the Scheme
| Nature of Dispute | If paid on or before 31 Dec 2020 | If paid after 31 Dec 2020 (till closure) |
|---|---|---|
| Disputed Tax | 100% of disputed tax | 110% of disputed tax |
| Disputed Tax (Search cases) | 125% of disputed tax | 135% of disputed tax |
| Only Penalty / Interest / Fee | 25% of disputed amount | 30% of disputed amount |
✅ Note: For cases with disputed tax, interest and penalty were waived fully if the tax amount was paid.
✅ Eligibility Criteria
A taxpayer was eligible if:
An appeal or litigation was pending as of 31 January 2020 before:
Commissioner (Appeals)
Income Tax Appellate Tribunal (ITAT)
High Court
Supreme Court
The dispute was related to income tax (not indirect tax)
The case was not related to:
Search and seizure with high tax impact
Undisclosed foreign income/assets
Benami transactions
Prosecution under certain laws (e.g., PMLA)
📋 Procedure to Avail Scheme
Taxpayer filed Form 1 (declaration under the scheme)
Designated Authority verified and issued a certificate (Form 3)
Taxpayer made the payment within the specified time
Intimation of payment submitted in Form 4
Case deemed resolved — appeal or proceedings deemed withdrawn
🎯 Benefits of the Scheme
| For the Government | For Taxpayers |
|---|---|
| Reduces litigation burden | Saves time and legal costs |
| Improves revenue collection | Avoids uncertainty and penalty |
| Enhances ease of doing business | Opportunity to resolve disputes peacefully |
🔚 Conclusion
The Direct Tax Vivad se Vishwas Act, 2020 was a landmark step toward building a non-adversarial tax regime by offering a transparent, time-bound, and amicable resolution of disputes. It reflects the government's move toward trust-based governance and simplification of compliance. Do write to us if you need any further assistance.
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