What is the Voluntary Settlement Scheme?

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What is the Voluntary Settlement Scheme? Blog Image


The Union Budget 2023 announced a “voluntary settlement scheme with standardised terms” to amicably end commercial/contractual disputes concerning government undertakings in which arbitral awards are

Why in News:

  • The budget 2023-24 has proposed a scheme for settling contractual dispute named Vivad se Vishwas II (Settling Contractual Disputes).


About Voluntary settlement scheme:

  • It is introduced to settle contractual disputes of government and government undertakings; wherein arbitral award is under challenge in a court.
  • This will be done by offering graded settlement terms depending on pendency level of the dispute.
  • Under the scheme, voluntary option is given to the private sector to come into the scheme or not.


Vivad Se Vishwas Scheme:

  • It is a direct tax scheme introduced by the Government of India in 2020for settling disputes between taxpayers and the income tax department.
  • It aims to minimize tax-related litigation.
  • Under this scheme, an individual taxpayer can claim full waiver on interest and penalty on the full and final settlement of the disputed tax amount. 
  • There was a time limit set for the payment of taxes under the scheme.


Q1) What is a contractual dispute?

A contractual dispute is a disagreement between parties to a contract about the performance, terms, or implementation of that contract.

Source: Budget announces ‘voluntary settlement scheme’ to end commercial disputes involving government and its undertakings