Vivaad se Vishwas Scheme

Under the Vivad Se Vishwas (VSV) Scheme, the settlement of a dispute requires the taxpayer to pay the "amount payable" as determined by the Designated Authority.

Based on the legal framework and guidance provided by the Central Board of Direct Taxes (CBDT), here is the clarification regarding your query:

1. Payment Requirement

The scheme is structured as a specific dispute resolution mechanism. You are required to pay the "amount determined" by the Designated Authority (DA) in the Form-2 certificate. The process generally requires:

• Form-1: Submission of the declaration.

• Form-2: Issuance of a certificate by the DA specifying the amount to be paid.

• Form-3: Intimation of payment by the declarant (you must provide proof of payment).

2. Adjustment of Refunds

The Vivad Se Vishwas Scheme does not have a provision that automatically allows for the "adjustment" of a refund from a different assessment year against the tax demand of a disputed year within the scheme's filing process.

• Payment is Mandatory: The tax liability settled under the scheme must be discharged through the prescribed payment mechanism to fulfill the requirements for obtaining the final order (Form-4).

• Risk of Double Payment/Confusion: Attempting to manually "adjust" a refund from another year (e.g., AY 2017-18) against the demand for the disputed year (e.g., AY 2016-17) without following the payment procedures set by the scheme can lead to administrative complications. As noted in professional practice, if an assessee erroneously ignores an adjusted refund or fails to pay the exact amount determined by the DA, they may face difficulties in getting the settlement finalized.

3. Recommended Action

If you have an outstanding refund for another year, you should follow these steps:

• Pay the Settled Amount: Ensure the amount determined in Form-2 is paid in cash/challan through the designated income tax portal to ensure your declaration is marked as "paid."

• Separate Refund Process: Separately follow up with your Jurisdictional Assessing Officer (JAO) to process the pending refund for the subsequent years (AY 2017-18 & 2018-19).

• Rectification/Grievance: If the department has already adjusted your refund against the demand, you must write to your Designated Authority immediately to rectify the demand status. Provide the proof of the adjustment and request a formal update or refund of the "excess payment" made (if you have already paid the scheme amount independently).

Summary: You cannot treat a refund from another year as a direct payment for the VSV scheme demand. You must pay the amount determined by the Designated Authority to satisfy the scheme's requirements and resolve the dispute. If a refund is being held or adjusted by the department, you should address this through a formal grievance or rectification request with your Assessing Officer to ensure the "settled" status is updated.