Outstanding Tax Demands Up To Rs 1 lakh Waived

The government has begun getting rid of old outstanding small income tax demands after setting a ceiling of Rs 1 lakh per taxpayer. In the Union Budget 2024 speech vide Order, F.no. 375/02/2023, dated 13-02-2024, Finance Minister Nirmala Sitharaman announced the extinguishment of the tax demands until Assessment Year 2015-16. Subsequent to the speech, the Central Board of Direct Taxes (CBDT) has released an order to remit and extinguish the tax demands under the Income Tax Act, 1961, Wealth Tax Act, 1957 or Gift Tax Act, 1958 [“Acts”].

Taxpayers can check the status of the demands by logging on to the income tax portal online. The scheme will be implemented by the Bengaluru-based Directorate of Income Tax (Systems) at the Centralised Processing Centre (CPC), preferably within two months. It will be limited to Rs 1,00,000 per assessee.

The order outlines various aspects of extinguishing the demands of different assessment years. It prescribes the monetary limit for outstanding tax demands and the maximum ceiling limit eligible for waiver for the assessee. The board has prescribed that demands which are outstanding as of Jan 31, 2024, shall be eligible for waiver. 

The following are the key takeaways from the order

• Monetary limit for waiver of demand

Demands up to Rs. 25,000 for the period pertaining up to Financial Year 2009-10 and up to Rs. 10,000 pertaining for Financial Year 2010-11 to 2014-15 will be eligible for the waiver. 

• Maximum ceiling of Rs. 1 lakh

Remission and extinguishment of eligible demands are capped at Rs. 1,00,000 per assessee, regardless of the total eligible amount across assessment years.

• No waiver for TDS/TCS demands

The above remission and extinguishment of entries of outstanding direct tax demands shall not be applicable on the demands raised against the tax deductors or tax collectors under TDS or TCS provisions of the Income-tax Act. 1961.

• Tax demand includes principal component of tax and any other interest

The outstanding demand comprises the tax principal under the Act plus interest, penalty, fees, cess, or surcharge as per Act provisions, with the ceiling limit as applicable.

• Interest on account of delayed payment not to be considered

Consequent to the aforesaid remission and extinguishment of entries of outstanding demand, there shall not be requirement of calculation of interest on account of delay in payment of demand under sub-section (2) of section 220 of the Income-tax Act, 1961 or corresponding provisions of Wealth-tax Act, 1957 and Gift-tax Act, 1958 and therefore, the same shall not be considered for the purpose of determining the ceiling of Rs. 1,00,000/- (Rupees one lakh).

• No right to claim credit or refund

The aforementioned remission and extinguishment of entries of outstanding demand shall not confer any right to claim credit of any of the remitted and extinguished demand by the taxpayer/assesseere or confer any right to claim refund of any sum by any taxpayer/assessee under Income-tax Act, 1961 or Wealth-tax Act, 1957 or Gift-tax Act, 1958 or any other law.

• No effect on criminal proceedings

Waiver of demand won’t impact ongoing or completed criminal proceedings against the assessee and doesn’t provide any benefit, concession, or immunity under such proceedings.