In a move aimed at providing substantial relief to taxpayers, the Indian government has initiated the process of clearing old outstanding small income tax demands, setting a cap of Rs 1 lakh per taxpayer. This strategic step involves a comprehensive online verification process, allowing taxpayers to check the status of their demands via the income tax portal.
The Bengaluru-based Directorate of Income Tax (Systems) at the Centralised Processing Centre (CPC) is spearheading this initiative, with a targeted implementation period of approximately two months. The scheme, restricted to Rs 1,00,000 per assessee, comes on the heels of Finance Minister Nirmala Sitharaman’s announcement during the interim budget. The minister had highlighted the withdrawal of small outstanding direct tax demands, amounting to Rs 25,000 or less for periods up to FY10 and Rs 10,000 or less for financial years from 2010-11 to 2014-15.
The Central Board of Direct Taxes (CBDT) has now released the pertinent order, outlining key features of the waiver:
- The demand waiver encompasses outstanding amounts as of January 31, 2024, under Income Tax, Wealth Tax, or Gift Tax.
- Demands up to Rs. 25,000 for the period up to FY 2009-10 and up to Rs. 10,000 for FY 2010-11 to FY 2014-15 are eligible for the waiver, including interest, penalty, and cess. The total outstanding demand must remain below the specified threshold.
- The maximum waiver is capped at Rs. 1,00,000 per taxpayer (PAN). Any aggregate demands exceeding this limit will not be covered by the waiver, continuing to remain payable.
- No refund claims can be asserted against the demands being waived off.
- The Income Tax Department’s Central Processing Cell (CPC) will automatically apply the waiver without requiring any intervention from the taxpayer. The anticipated completion timeframe for this process is within two months.
- Taxpayers can conveniently log on to the Income Tax Portal to assess the status of their outstanding demands, facilitating transparency and accessibility.
Industry experts emphasize that this order offers significant relief to taxpayers grappling with demand notices for decades-old liabilities. The decision aligns with the broader goal of simplifying administrative processes and reducing the burden on both taxpayers and the tax department. With over 2.68 crore disputed demands for Income Tax, wealth tax, and gift tax amounting to Rs 35 trillion pending, this waiver targets 2.1 crore cases with demands up to Rs 25,000, offering a respite to those navigating mismatches in historical tax records. As India charts a course towards tax compliance and streamlined processes, this move is poised to foster a more taxpayer-friendly environment.
