The Income Tax department has announced a significant relief measure for taxpayers by setting a ceiling of ₹1 lakh per taxpayer for the withdrawal of small tax demands. This decision comes in the wake of the interim budget announcement regarding the withdrawal of direct tax demands.
Following Finance Minister Nirmala Sitharaman’s declaration in the interim budget for 2024-25, the Income Tax department has specified criteria for the withdrawal, focusing on demands until the assessment year 2015-16.
Under this directive, tax demands for the assessment year 2010-11, up to ₹25,000, and for the assessment years 2011-12 to 2015-16, up to ₹10,000, will be withdrawn. This move is expected to bring relief to taxpayers and ease financial burdens.
The tax department’s order specifies that outstanding demands related to income tax, wealth tax, and gift tax as of January 31, 2024, will be remitted and extinguished, subject to a maximum ceiling of ₹1 lakh for any specific taxpayer or assessee. This ceiling includes the principal tax component, along with interest, penalty, fee, cess, and surcharge.
However, it’s important to note that this remission will not apply to demands raised against tax deductors or tax collectors under the Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) provisions of the Income-tax Act.
The Central Board of Direct Taxation (CBDT) clarified that the ₹1 lakh limit covers outstanding demand entries in the tax authorities’ books concerning the principal tax component, as well as interest, penalty, fee, cess, or surcharge under the three tax acts.
Despite the withdrawal of demands, taxpayers will not be eligible for any claims for credit or refunds. Additionally, this action does not provide immunity from any pending, initiated, or contemplated criminal proceedings against the taxpayer.
The CBDT emphasized that demands falling within the prescribed limits, even if eligible for withdrawal, will not be extinguished if raised against entities required to deduct or collect tax at source under the Income-tax provisions related to TDS or TCS.
Sources By Agencies
