Litigation with the tax department is often a last resort for businesses due to its resource-intensive nature, prolonging uncertainty and diverting focus from core business operations. The introduction of Vivad Se Vishwas (VsV) 1.0 was a milestone in resolving longstanding tax disputes, providing a much-needed breakthrough for taxpayers and the government alike.

Before VSV 1.0, a staggering 4.83 lakh direct tax appeals were pending across various appellate forums—from the Commissioner (Appeals) and ITAT to the High Courts and the Supreme Court—locking up an immense Rs 4.96 trillion in unresolved disputes. VSV 1.0 successfully resolved 1.46 lakh (30%) of these appeals, recovering Rs 0.54 trillion (11%) for the government - an admirable achievement.

Despite this success, over 5.44 lakh appeals are still pending at the Commissioner (Appeals) level alone, presenting an urgent need for action. The total direct tax disputes pending have multifolded to the tune of Rs 10.40 trillion, which is a staggering 5.6% of India’s GDP. VSV 2.0, while primarily focused on resolving these disputes, offers businesses a compelling reason to opt for settlement beyond tax implications. The following non-tax considerations highlight why businesses might choose to cut short litigation under VSV 2.0: