Disputed Penalty | Interest | Fee under DTVSV – Calculation | Guidelines
- Blog|Income Tax|
- 14 Min Read
- By Taxmann
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- Last Updated on 13 November, 2024
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Under the Direct Tax Vivad se Vishwas (DTVSV) Scheme, "disputed penalty, interest, and fee" refers to amounts related to penalties, interest, or fees imposed under the Income-tax Act, 1961, that are under dispute in appeals filed by either the taxpayer or the tax department. The scheme allows taxpayers to settle these disputes by paying a percentage of the disputed amount, depending on the timing of payment and whether the appeal is filed by the taxpayer or the department. The scheme provides detailed computational guidelines for these payments in various scenarios, enabling a simplified resolution process.
Table of Contents
- Amount Payable Where Declaration Relates to Disputed Fee With or Without Disputed Tax
- Computation of ‘Tax Arrear’ in Respect of Disputed Interest
- Computation of Amount Payable u/s 90 in Respect of Disputed Penalty
Check out Taxmann's Law Relating To Direct Tax Vivad Se Vishwas Scheme 2024 which offers a detailed analysis of the Direct Tax Vivad se Vishwas Scheme (DTVSV) 2024, with practical insights aligned with judicial decisions and CBDT clarifications. It includes illustrative case studies to showcase real-world applications of the scheme and step-by-step guidance for online filing of declarations with visual aids. It is a comprehensive resource for understanding and resolving tax disputes effectively.
- Computational charts in various combination of circumstances (i.e. having regard to whether disputed tax involved, when only disputed penalty/interest/fee involved, whether disputed TDS/TCS involved, forum where dispute is pending, whether search case or non-search case, whether filed by assessee or department) are given in Schedule A, Schedule B and Schedule C of Form-1 of DTVSV Rules, 2024.
- These computational charts should be referred to for computation of amount payable under the Scheme.
- Credit shall be available for amounts paid against disputed amounts prior to filing declaration. If these amounts paid exceed amount payable under the Scheme, excess shall be refunded without interest under section 244A of the 1961 Act
1. Amount Payable Where Declaration Relates to Disputed Fee With or Without Disputed Tax
“Disputed fee” means the fee determined under the provisions of the Income-tax Act, 1961 in respect of which appeal has been filed by the appellant; [Section 89(1)(f) of the Scheme].
The expression ‘fee determined under the provisions of the Income-tax Act, 1961’ would refer to:
- Fee for default in furnishing TDS/TCS statements [Section 234E of the 1961 Act].
- Fee for default in furnishing return of income [Section 234F of the 1961 Act].
FAQ No. 1 of CBDT’s Circular No. 9/2020, dated 22.04.2020, clarifies as under:
FAQ 1. Whether 234E and 234F appeals are covered?
If appeal has been filed against imposition of fees under section 234E or 234F of the Act, the appellant would be eligible to file declaration for disputed fee and amount payable under Vivad se Vishwas shall be 25% or 30% of the disputed fee, as the case may be.
If the fee imposed under section 234E or 234F pertains to a year in which there is disputed tax, the settlement of disputed tax will not settle the disputed fee. If assessee wants to settle disputed fee, he will need to settle it separately by paying 25% or 30% of the disputed fee, as the case may be.
The definition of “disputed fee” [Section 89(1)(f) of the Scheme] refers to “fee….in respect of which appeal has been filed by the appellant”. So, a question arises what if any dispute of the types mentioned in (b) to (g) are pending in respect of fee only and there is no dispute in respect of tax? Can a taxpayer avail the settlement under the Act in such a case? Also what about cases where appeal/WP/SLP is filed by the department? Can departmental appeal/WP/SLP be settled if it pertains to disputed fee? FAQ No. 20 of Circular No. 9/2020, dated 22.04.2020 clarifies that the terms of availing Vivad se Vishwas in case of disputed penalty/interest/fee are similar to terms in case of disputed tax. Therefore, the term “appeal” in section 89(1)(f) of the Scheme would cover deemed appeals and departmental appeals also. This becomes clear when we see the various detailed computation charts provided in different combinations of situations by Schedule C of Form-1 of DTVSV Rules.
1.1 Computation of amount payable in respect of disputed fee under section 90
FAQ No. 28 of CBDT’s Circular No. 9/2020, dated 22.04.2020, clarifies the computation of amount payable in respect of disputed fee as under:
A. In appeals/writ/SLP/DRP objections/revision application under section 264/arbitration filed by the assessee:
(a) In case payment is made till 31st March, 2020:
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- 25% of the disputed penalty, interest or fee where dispute relates to disputed penalty, interest or fee only.
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(b) In case payment is made after 31st March, 2020:
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- 30% of the disputed penalty, interest or fee in case of dispute related to disputed penalty, interest or fee only.
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Note:
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- If in an appeal before Commissioner (Appeals) or in objections pending before DRP, there is an issue on which the appellant has got favourable decision from ITAT (not reversed by HC or SC) or from the High Court (not reversed by SC) in earlier years then the amount payable shall be half or 50% of above amount.
- Similarly, if in an appeal before ITAT, there is an issue on which the appellant has got favourable decision from the High Court (not reversed by SC) in earlier years then the amount payable shall be half or 50% of above amount.
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B. In appeals/writ/SLP filed by the Department –
(a) In case payment is made till 31st March, 2020:
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- 12.5% of the disputed penalty, interest or fee in case of dispute related to disputed penalty, interest or fee only.
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(b) In case payment is made after 31st March, 2020:
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- 15% of the disputed penalty, interest or fee in case of dispute related to disputed penalty, interest or fee only.
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1.2 Is there no provision for 50% concession in appeal pending in HC on an issue where the assessee has got relief on that issue from the SC?
If the appellant has got decision in his favour from SC on an issue, there is no dispute now with regard to that issue and he need not settle that issue. If that issue is part of the multiple issues, the disputed tax may be calculated on other issues considering nil tax on this issue. [FAQ No. 37 of CBDT’s Circular No. 9/2020, dated 22.04.2020].
1.3 Computation where declaration relates to disputed fee
Schedule C of Form-1 of Direct Tax Vivad se Vishwas Rules 2024 “C. Schedule applicable where declaration relates to disputed penalty, interest or fee only (Applicable for PAN & TAN)” set out detailed computation chart for declaration related to disputed penalty/interest/fee in various combinations of circumstances as under:
1.3a Combination: Disputed penalty/interest/fee + JCIT(A)/CIT(A) + Assessee
Schedule XIX. To be filled in case appeal of assessee is pending before the JCIT(A)/CIT(A) as on 22.07.2024
| A | Total amount of penalty/interest/fees per order against which appeal is filed | A | ||
| B | Disputed amount of penalty/interest/fee out of A | B | B(i)+B (ii) | |
| (i) | relating to issues, which have been decided in favour of assessee in his case for any assessment year by ITAT (and such order has not been subsequently reversed by the High Court) or High Court (and such order has not been subsequently reversed by the Supreme Court) | B(i) | ||
| (ii) | relating to issues other than B(i) | B(ii) | ||
| C | Penalty or interest or fee enhanced by CIT(A)/JCIT(A) | C | ||
| D | Tax arrears (B(i)+B(ii)+C) | D | ||
| X | Amount payable under DTVSV on or before 31.12.2024 New appellant case 0.125 × B(i) + 0.25B(ii) + 0.25 × C Old appellant case 0.15 × B(i) + 0.3B(ii) + 0.3 × C |
X | ||
| Y | Amount payable under DTVSV on or after 01.01.2025 New appellant case 0.15 × B(i) + 0.3 × B(ii) + 0.3 × C Old appellant case 0.175 × B(i) + 0.35 × B(ii) + 0.35 × C |
Y | ||
Note: The first proviso in section 2(1)(j) of the DTVSV Act, 2020 provided clearly that enhancements to be taken in to account only if notice of enhancement is issued on or before the specified date. The said proviso is omitted from section 89(1)(j).
However, see also FAQ No. 7 in CBDT’s Circular No. 33/2016
If the appellant has got decision in his favour from SC on an issue, there is no dispute now with regard to that issue and he need not settle that issue. If that issue is part of the multiple issues, the disputed tax may be calculated on other issues considering nil tax on this issue. [FAQ No. 37 of CBDT’s Circular No. 9/2020].
1.3b Combination: Disputed penalty/interest/fee + ITAT + Assessee
Schedule XX. To be filled in case appeal of assessee is pending before the ITAT as on 22.07.2024
| A | Total amount of penalty/interest/fee as per order against which appeal has been filed | A | ||
| B | Disputed penalty/interest/fee due to appeal by assessee: | B | B(i) + B(ii) | |
| (i) | relating to issues, which have been decided in favour of assessee in his case for any assessment year by High Court (and such order has not been subsequently reversed by the Supreme Court) | B(i) | ||
| (ii) | relating to issues other than B(i) | B(ii) | ||
| C | Tax arrears (B(i) + B(ii)) | C | ||
| X | Amount payable under DTVSV on or before 31.12.2024 New appellant case 0.125 × B(i) Old appellant case 0.15 × B(i) |
X | ||
| Y | Amount payable under DTVSV on or after 01.01.2025 New appellant case 0.15 × B(i) Old appellant case 0.175 × B(i) |
Y | ||
Note: If the appellant has got decision in his favour from SC on an issue, there is no dispute now with regard to that issue and he need not settle that issue. If that issue is part of the multiple issues, the disputed tax may be calculated on other issues considering nil tax on this issue. [FAQ No. 37 of CBDT’s Circular No. 9/2020]
1.3c Combination: Disputed penalty/interest/fee + ITAT + Department
Schedule XXI. To be filled in case appeal of Department is pending before the ITAT as on 22.07.2024
| A | Total amount of penalty/interest/fee as per order against which appeal filed | A | |
| B | Disputed penalty/interest/fee relating to issues on which appeal has been filed | B | |
| C | Tax arrears (B) | C | |
| X | Amount payable under DTVSV on or before 31.12.2024 New appellant case 0.125 × B Old appellant case 0.15 × B |
X | |
| Y | Amount payable under DTVSV on or after 01.01.2025 New appellant case 0.15 × B Old appellant case 0.175 × B |
Y |
Note: If the appellant has got decision in his favour from SC on an issue, there is no dispute now with regard to that issue and he need not settle that issue. If that issue is part of the multiple issues, the disputed tax may be calculated on other issues considering nil tax on this issue. [FAQ No. 37 of CBDT’s Circular No. 9/2020]
1.3d Combination: Disputed penalty/interest/fee + HC + Assessee
Schedule XXII. To be filled in case appeal or writ of assessee is pending before the High Court as on 22.07.2024
| A | Total amount of penalty/interest/fee as per order against which appeal or writ has been filed | A | |
| B | Disputed penalty/interest/fee due to appeal by assessee | B | |
| C | Tax arrears (B) | C | |
| X | Amount payable under DTVSV on or before 31.12.2024 New appellant case 0.25 × B Old appellant case 0.3 × B |
X | |
| Y | Amount payable under DTVSV on or after 01.01.2025 New appellant case 0.3 × B Old appellant case 0.35 × B |
Y |
Note: If the appellant has got decision in his favour from SC on an issue, there is no dispute now with regard to that issue and he need not settle that issue. If that issue is part of the multiple issues, the disputed tax may be calculated on other issues considering nil tax on this issue. [FAQ No. 37 of CBDT’s Circular No. 9/2020]
1.3e Combination: Disputed penalty/interest/fee + HC + Department
Schedule XXIII. To be filled in case appeal or writ of Department is pending before the High Court as on 22.07.2024
| A | Total amount of penalty/interest/fee as per order against which appeal or writ has been filed | A | |
| B | Disputed penalty/interest/fee on issues raised in appeal | B | |
| C | Tax arrears (B) | C | |
| X | Amount payable under DTVSV on or before 31.12.2024 New appellant case 0.125 × B Old appellant case 0.15 × B |
X | |
| Y | Amount payable under DTVSV on or after 01.01.2025 New appellant case 0.15 × B Old appellant case 0.175 × B |
Y |
Note: If the appellant has got decision in his favour from SC on an issue, there is no dispute now with regard to that issue and he need not settle that issue. If that issue is part of the multiple issues, the disputed tax may be calculated on other issues considering nil tax on this issue. [FAQ No. 37 of CBDT’s Circular No. 9/2020]
1.3f Combination: Disputed penalty/interest/fee + SC + Assessee
Schedule XXIV. To be filled in case appeal or writ or SLP of assessee is pending before the Supreme Court as on 22.07.2024
| A | Total amount of penalty/interest/fee as per order against which appeal or writ or SLP has been filed | A | |
| B | Disputed penalty/interest/fee due to appeal by assessee | B | |
| C | Tax arrears (B) | C | |
| X | Amount payable under DTVSV on or before 31.12.2024 New appellant case 0.25 × B Old appellant case 0.3 × B |
X | |
| Y | Amount payable under DTVSV on or after 01.01.2025 New appellant case 0.3 × B Old appellant case 0.35 × B |
Y |
Note: If the appellant has got decision in his favour from SC on an issue, there is no dispute now with regard to that issue and he need not settle that issue. If that issue is part of the multiple issues, the disputed tax may be calculated on other issues considering nil tax on this issue. [FAQ No. 37 of CBDT’s Circular No. 9/2020]
1.3g Combination: Disputed penalty/interest/fee + SC + Department
Schedule XXV. To be filled in case appeal or writ or SLP of Department is pending before the Supreme Court as on 22.07.2024
| A | Total amount of penalty/interest/fee as per order against which appeal or writ or SLP has been filed | A | |
| B | Disputed penalty/interest/fee on issues raised in appeal | B | |
| C | Tax arrears (B) | C | |
| X | Amount payable under DTVSV on or before 31.12.2024 New appellant case 0.125 × B Old appellant case 0.15 × B |
X | |
| Y | Amount payable under DTVSV on or after 01.01.2025 New appellant case 0.15 × B Old appellant case 0.175 × B |
Y |
Note: If the appellant has got decision in his favour from SC on an issue, there is no dispute now with regard to that issue and he need not settle that issue. If that issue is part of the multiple issues, the disputed tax may be calculated on other issues considering nil tax on this issue. [FAQ No. 37 of CBDT’s Circular No. 9/2020]
1.3h Combination: Disputed penalty/interest/fee + 264 + Assessee
Schedule XXVI. To be filled in case revision application of assessee under section 264 is pending before the PCIT/CIT as on 22.07.2024
| Amount of TDS/TCS disputed in appeal | |||
| A | Total amount of penalty/interest/fee as per order against which revision application filed | A | |
| B | Disputed penalty/interest/fee on issues raised in revision application | B | |
| D | Tax arrears (B) | D | |
| X | Amount payable under DTVSV on or before 31.12.2024 New appellant case 0.25 × B Old appellant case 0.3 × B |
X | |
| Y | Amount payable under DTVSV on or after 01.01.2025 New appellant case 0.3 × B Old appellant case 0.35 × B |
Y | |
Note: If the appellant has got decision in his favour from SC on an issue, there is no dispute now with regard to that issue and he need not settle that issue. If that issue is part of the multiple issues, the disputed tax may be calculated on other issues considering nil tax on this issue. [FAQ No. 37 of CBDT’s Circular No. 9/2020]
2. Computation of ‘Tax Arrear’ in Respect of Disputed Interest
“Disputed interest” means the interest determined in any case under the provisions of the Income-tax Act, 1961, where—
(i) such interest is not charged or chargeable on disputed tax;
(ii) an appeal has been filed by the appellant in respect of such interest; [Section 89(1)(h) of the Scheme].
The definition of “disputed tax” in section 89(1)(j) of the Scheme covers all the tax disputes in (a) to (g) above. However, the definitions of “disputed interest” [Section 89(1)(h) of the Scheme] and “disputed penalty” [Section 89(1)(i) of the Scheme] only refer to “an appeal has been filed by the appellant in respect of” such interest/such penalty. So, a question arises what if any dispute (deemed appeals) of the types mentioned in (b) to (g) are pending in respect of interest/penalty/fee only and there is no dispute in respect of tax? Can a taxpayer avail the settlement under the Act in such a case? Also what about cases where appeal/WP/SLP is filed by the department? Can departmental appeal/WP/SLP be settled if it pertains to disputed interest? FAQ No. 20 of Circular No. 9/2020, dated 22.04.2020 clarifies that the terms of availing Vivad se Vishwas in case of disputed penalty/interest/fee are similar to terms in case of disputed tax. Therefore, the term “appeal” in section 89(1)(f) of the Scheme would cover deemed appeals and departmental appeals also.
2.1 Application for waiver of interest is not an “appeal” and can’t be settled under Vivad se Vishwas
FAQ No. 13 of CBDT’s Circular No. 9/2020, dated 22.04.2020, clarifies that the term “appeal will not cover application for waiver of interest under section 234A, 234B or 234C filed before the competent authority which is pending as on 22.07.2024
FAQ No. 13 of CBDT’s Circular No. 9/2020, dated 22.04.2020, read as under:
With respect to interest under section 234A, 234B or 234C, there is no appeal but the assessee has filed waiver application before the competent authority which is pending as on 31 Jan 2020? Will such cases be covered under Vivad se Vishwas?
No, such cases are not covered. Waiver applications are not appeal within the meaning of Vivad se Vishwas.
2.2 Computation of amount payable in respect of disputed interest u/s 90
The computation of amount payable in respect of disputed interest is as under:
| Sl. No. |
Nature of tax arrear | Amount payable under this Scheme on or before the 31st day of December, 2024 | Amount payable under this Scheme on or after the 1st day of January, 2025 but on or before the last date |
| (a) | Where the tax arrear relates to disputed interest or disputed penalty or disputed fee where the declarant is an appellant after the 31st day of January, 2020 but on or before the specified date. | 25% of disputed interest or disputed penalty or disputed fee if appeals/writ/SLP/DRP objections/revision application u/s 264 is filed by assessee | 30 % of disputed interest or disputed penalty or disputed fee if appeals/writ/SLP/DRP objections/revision application u/s 264 is filed by assessee |
| 12.5% of disputed interest or disputed penalty or disputed fee if appeals/writ/SLP is filed by the Income-Tax Department | 15% of disputed interest or disputed penalty or disputed fee if appeals/writ/SLP is filed by the Income-Tax Department | ||
| (b) | Where the tax arrear relates to disputed interest or disputed penalty or disputed fee where the declarant is an appellant on or before the 31st day of January, 2020 at the same appellate forum in respect of the such tax arrear. | 30% of disputed interest or disputed penalty or disputed fee if appeals/writ/SLP/DRP objections/revision application u/s 264 is filed by assessee | 35% of disputed interest or disputed penalty or disputed fee if appeals/writ/SLP/DRP objections/revision application u/s 264 is filed by assessee: |
| 15% of disputed interest or disputed penalty or disputed fee if appeals/writ/SLP is filed by the Income-Tax Department | 17.5% of disputed interest or disputed penalty or disputed fee Tax if appeals/writ/SLP is filed by the Income-Tax Department |
2.3 Is there no provision for 50% concession in appeal pending in HC on an issue where the assessee has got relief on that issue from the SC?
If the appellant has got decision in his favour from SC on an issue, there is no dispute now with regard to that issue and he need not settle that issue. If that issue is part of the multiple issues, the disputed tax may be calculated on other issues considering nil tax on this issue. [FAQ No. 37 of CBDT’s Circular No. 9/2020, dated 22.04.2020].
2.4 Addition was made u/s 143(3) on two issues whereas appeal filed only for one addition. Whether interest and penalty be waived for both additions?
Under Vivad se Vishwas, interest and penalty will be waived only in respect of the issue which is disputed in appeal and for which declaration is filed. Hence, for the undisputed issue, the tax, interest and penalty shall be payable. [FAQ No. 38 of CBDT’s Circular No. 9/2020, dated 22.04.2020].
2.5 Are declarations covering disputed interest allowed where there is no dispute on tax corresponding to such interest?
Yes. Declarations covering disputed interest (where there is no dispute on tax corresponding to such interest) are eligible under Vivad se Vishwas. [FAQ No. 4 of CBDT’s Circular No. 9/2020, dated 22.04.2020].
3. Computation of Amount Payable u/s 90 in Respect of Disputed Penalty
“Disputed penalty” means the penalty determined in any case under the provisions of the Income-tax Act, 1961, where—
(i) such penalty is not levied or leviable in respect of disputed income or disputed tax, as the case may be;
(ii) an appeal has been filed by the appellant in respect of such penalty; [Section 89(1)(i) of the Scheme].
“Disputed income”, in relation to an assessment year, means the whole or so much of the total income as is relatable to the disputed tax; [Section 96(1)(g) of the Scheme].
Under the Scheme, amnesty could be sought only in respect of a penalty that was imposed under the Income-tax Act; the Scheme did not intend to cover only such penalties as had been imposed on an assessee along with the assessment order [Grihalakshmi Films v. Joint Commissioner of Income-tax, Range 1, Kozhikode [2017] 83 taxmann.com 215 (Kerala)]
3.1 Is there no provision for 50% concession in appeal pending in HC on an issue where the assessee has got relief on that issue from the SC?
If the appellant has got decision in his favour from SC on an issue, there is no dispute now with regard to that issue and he need not settle that issue. If that issue is part of the multiple issues, the disputed tax may be calculated on other issues considering nil tax on this issue. [FAQ No. 28 of CBDT’s Circular No. 9/2020, dated 22.04.2020].
3.2 Addition was made u/s 143(3) on two issues whereas appeal filed only for one addition. Whether interest and penalty be waived for both additions?
Under Vivad se Vishwas, interest and penalty will be waived only in respect of the issue which is disputed in appeal and for which declaration is filed. Hence, for the undisputed issue, the tax, interest and penalty shall be payable. [FAQ No. 38 of CBDT’s Circular No. 9/2020, dated 22.04.2020].
3.3 If quantum appeal as well as penalty appeal pending, can taxpayer settle one to the exclusion of the other?
Imagine a case where an appellant desires to settle concealment penalty appeal pending before CIT (A), while continuing to litigate quantum appeal that has travelled to higher appellate forum. Considering these are two independent and different appeals, whether appellant can settle one to exclusion of others? If yes, whether settlement of penalty appeal will have any impact on quantum appeal? In the this regard, FAQ No. 8 of Circular No. 9/2020, dated 22.04.2020 clarifies as under:
- If both quantum appeal covering disputed tax and appeal against penalty levied on such disputed tax for an assessment year are pending, the declarant is required to file a declaration form giving details of both disputed tax appeal and penalty appeal. However, he would be required to pay relevant percentage of disputed tax only.
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