Context: 

Recently, the Central Board of Direct Taxes (CBDT) notified the Direct Tax Vivad Se Vishwas Scheme 2.0, which will take effect from October 1, 2024. 

More on the News:

• This scheme aims to reduce ongoing income tax litigation by providing taxpayers with a streamlined process to settle pending disputes.
• The Ministry of Finance issued a notification confirming that taxpayers with pending disputes or appeals as of July 22, 2024, can benefit from this new scheme. 

Direct Tax Vivad Se Vishwas Act, 2020 (VSV 1.0):

• It was launched for appeals pending as of January 31, 2020. 
• The scheme got a very encouraging response from the taxpayers and also garnered substantial revenue for the government.
• VSV 1.0 covered both appeals and cases where time limits for filing appeal had not lapsed whereas VSV 2.0 covers only pending appeals.

Direct Tax:

• A direct tax is a kind of tax that is levied against people or things directly according to their wealth or income. 
• Direct taxes include levies such as company tax, income tax, and so forth. 
• The Central Board of Direct Taxes (CBDT) is in charge of these levies.
• The key feature of Direct taxes is that they work on a progressive basis (Taxes Proportional to Income).

About Vivad Se Vishwas Scheme 2024 (VSV 2.0):

• The VSV 2.0 is designed to minimize litigation by allowing taxpayers to resolve income tax appeals without penalties or interest.
• Under this Scheme Taxpayers can file appeals across various appellate forums, including the Income Tax Appellate Tribunal and higher courts (ITAT), High Court, and Supreme Court.
• It offers settlements without penalties or interest and ensures no prosecution will be initiated for resolved cases.
• The scheme seeks to address the growing number of pending appeals, which currently stands at approximately 544,000 just before the Income Tax commissioner (appeals), with a disputed amount of ₹10.6 trillion.

Inclusions: The scheme applies to appeals, writ petitions, and special leave petitions pending as of July 22, 2024. 

• Cases including objections submitted to the Dispute Resolution Panel (DRP) but without final assessment rulings are included, as are applications for revision pending before the Commissioner.

Exclusions: Cases involving searches, prosecutions, unreported foreign income, taxpayers subject to certain legal constraints, or significant offenses are excluded

Financial Impact: By providing a simplified mechanism for filing appeals and resolving disputes, the scheme aims to alleviate the burden on both taxpayers and the judicial system.