The Vivad se Vishwas (VsV) is a statutory amnesty mechanism and dispute resolution scheme enacted by the Government of India to settle pending direct tax disputes. Its original form was the Direct Tax Vivad se Vishwas Act, 2020 (Act No. 3 of 2020). The scheme was announced by Finance Minister Nirmala Sitharaman in the Union Budget speech of February 1, 2020, and received presidential assent on March 17, 2020. The primary objective was to reduce the massive backlog of litigation, which at the time involved approximately 4,83,000 direct tax cases locking up an estimated ₹9.32 lakh crore in revenue across various appellate forums.
The scheme works by allowing a taxpayer, or "declarant," to file a declaration (Form-1 and Form-2) with the Designated Authority (DA), an officer of the rank of Commissioner of Income-tax. The DA then issues a certificate (Form-3) quantifying the amount payable within fifteen days. The key mechanism is that the declarant agrees to pay the disputed tax amount in full, in exchange for a complete waiver of associated interest, penalty, and immunity from prosecution. Upon payment, the appeal is deemed withdrawn, ending the dispute. VsV operates as special legislation, overriding the ordinary appeal provisions of the Income-tax Act, 1961. It is conceptually linked to the earlier Sabka Vishwas Scheme for indirect tax disputes.
The scheme was recently revived as Vivad se Vishwas 2.0, formally the Direct Tax Vivad se Vishwas Scheme, 2024, announced in the Union Budget of July 23, 2024, and operationalized from October 1, 2024. This updated version covers appeals pending as of July 22, 2024, and maintains the core principle of settling the disputed tax for a waiver of interest and penalty.