Consequent to FM's Speech, CBDT Orders Write-off of Small Demands of up to Rs1 Lakh
Moneylife Digital Team 23 February 2024
The Central Board of Direct Taxes (CBDT), in an order last week, has asked the directorate of income-tax (DIT) (systems) and central processing centre (CPC) to implement, preferably within two months, remission and extinguishment of 'small demands' outstanding as of 31 January 2024. The order is for the remission and extinguishment of certain outstanding direct income-tax demands of up to Rs1 lakh per taxpayer. 
 
According to the order issued by CBDT, income-tax (I-T) demands of Rs25,000 up to assessment year (AY) 2010-11 and up to Rs10,000 for AY2011-12 to AY2015-16 should be remitted or extinguished subject to a maximum limit of Rs1 lakh for any taxpayer.
 
The order covers demand entries about the Wealth Tax Act and Gift Tax Act apart from the I-T Act and interest, fee, penalty, surcharge and cess under these three statutes. 
 
However, the remission or extinguishment is not applicable to demands for tax deducted at source (TDS) or tax collected at source (TCS), but the tax liability arising from the invocation of Section 2(24)(xviii) (subsidy or grant) is covered. 
 
CBDT also clarifies that the remission or extinguishment will not confer any right to claim any credit or refund. 
 
The remission or extinguishment shall not have any effect on criminal proceedings pending, initiated or contemplated against the assessee and will also not confer any right to claim immunity under any law, and the CPC can rectify any mistake apparent from the record arising on execution of this order, it added.
 
Since eligible outstanding direct tax demands have been remitted and extinguished, CBDT asked taxpayers to log into their account and follow the path Pending Action > Response to Outstanding Demand to check the status of 'Extinguished Demands' in their case.   
 
Earlier this month, while keeping direct and indirect tax rates unchanged, Union finance minister (FM) Nirmala Sitharaman provided some relief for taxpayers from income-tax (I-T) demand notices. She says demand notices of up to Rs25,000 and Rs10,000 from financial year (FY)09-10 and for FY10-11 to FY14-15, respectively, would be withdrawn. (No Changes in Tax Rates, FM Provides Some Relief on Old I-T Demand Notices)
 
Presenting the interim budget in the Lok Sabha, the FM says, "There are a large number of petty, non-verified, non-reconciled or disputed direct tax demands, many of them dating back as far back as 1962, causing anxiety to honest taxpayers and hindering refunds. In line with our vision to improve ease of living and ease of doing business, I propose to withdraw such outstanding direct tax demands up to Rs25,000 pertaining to the period up to FY09-10 and up to Rs10,000 for FY10-11 to FY14-15."
 
According to the FM, this move will benefit nearly 10mn (million) taxpayers as they will not have to pay any taxes based on demand notices issued by the I-T department.
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