Taxpayer’s Delight: Clearing Small Demands, Easing Burdens!

On 1st February 2024, Finance Minister Nirmala Sitharaman announced during the interim budget the waiver of small outstanding demand under the Income Tax Act, 1961, Wealth Tax Act, 1957 or Gift Tax Act, 1958. The Income Tax department will waive off outstanding tax demands of ₹25,000 or less for the period upto the financial year 2009-10 and ₹10,000 or less for the financial years from 2011-12 to 2014-15. Notably, they will waive every single demand below ₹10,000 and ₹25,000, but the total of all these demands cannot exceed ₹1,00,000 for any specific taxpayer across all financial years.

When calculating the ceiling of ₹1,00,000, any demand entry with a value exceeding ₹25,000 or ₹10,000 shall not be considered. The waiver of outstanding demands will apply to any outstanding demands as of 31st January 2024.

The CBIT has specified that waiver of demand does not apply to the demands under TDS or TCS provisions of the Income-tax Act 1961. Eligible outstanding tax demand covers principal tax demands under the covered Acts, including interest, penalty, fee, cess, or surcharge levied under the provisions of such Acts.

The clarification also specifies that when computing the ceiling limit, they will not consider interest computed under section 220(2) due to delays in payment of demand.

The extinguishment of outstanding demand does not grant the taxpayer the right to:

• Claim credit for the waived amount under the Income-tax Act, 1961, Wealth-tax Act, 1957, Gift-tax Act, 1958, or any other law, if such benefit has been granted.
• Request a refund under Income-tax Act, 1961 Wealth-tax Act, 1957 Gift-tax Act, 1958, or any other law.
• Impact any pending, initiated, or contemplated criminal proceedings against the taxpayer under any law, without conferring additional benefits, concessions, or immunity, unless specifically stated otherwise in the order.

Benefits For Taxpayer:

• The Income Tax department expects that the withdrawal of outstanding tax demands will facilitate the timely issuance of refunds by resolving hurdles faced in processing refunds for subsequent assessment years due to pending demands from previous years.
• The withdrawal of demand resolves tax disputes for taxpayers, offering them peace of mind.
• Automatic waiver of interest and penalties in the scheme provides huge monetary relief to taxpayers and gets rid of legal hassles.

Process for waiving tax demands

The Income Tax Department’s Central Processing Cell will automatically apply the waiver without requiring any intervention from the taxpayer. They expect to complete the process within 2 months.

The taxpayer can check the pending status on the official income tax portal.

HOW TO CHECK THE STATUS?

• Visit the income tax portal
• Login and navigate to the pending action tab
• Click on response to outstanding demand
• It will show the data. In case of no outstanding demand, it will show the message ‘No records of demand’ and if the demand is waived off it will show “Demand extinguished”.

In case of any doubt, one can call the toll-free numbers 1800303090130 or 180020335435

CONCLUSION

This groundbreaking initiative vows to significantly alter the landscape for over 1 crore taxpayers burdened by numerous petty, non-verified, non-reconciled, or disputed direct tax demands dating back to 1962. This move not only brings relief to honest taxpayers but also paves the way for smoother refund processes in the years ahead.

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