Income Tax Department Sets Ceiling for Small Tax Demands Withdrawal

The Income Tax department has prescribed a ceiling of Rs 1 lakh per assessee for withdrawal of small tax demands till Assessment Year 2015-16, in accordance with a scheme announced in the Budget. This move comes following an announcement made by Finance Minister Nirmala Sitharaman in the 2024-25 Budget.

Overview of the Scheme

The Budget had announced that tax demands for AY 2010-11 of up to Rs 25,000 and for AY 2011-12 to 2015-16 of up to Rs 10,000 will be withdrawn. This means that tax demands totalling about Rs 3,500 crore will be withdrawn following the announcement.

CBDT Order

The Central Board of Direct Taxes (CBDT) has issued an order giving effect to the Budget announcement. The order specifies that outstanding tax demands pertaining to income tax, wealth tax, and gift tax as of January 31, 2024, shall be remitted and extinguished, subject to the maximum ceiling of Rs 1 lakh for any specific taxpayer/assessee.

The limit of Rs 1 lakh includes the principal component of tax demand, interest, penalty or fee, cess, and surcharge. However, the remission shall not be applicable to demands raised against tax deductors or tax collectors under TDS or TCS provisions of the I-T Act.

Important Points to Note

  • The waiver or cancellation does not entitle taxpayers to any claims for credit or refunds.
  • It will not influence any ongoing, planned, or potential criminal legal proceedings against the taxpayer.
  • It does not grant any immunity under any legislation.

Advisory to Taxpayers

Nangia Andersen India Partner Maneesh Bawa advised taxpayers to access their online accounts and navigate to Pending Action > Response to Outstanding Demand to verify the status of ‘Extinguished Demands’ related to them.

Revenue Secretary’s Statement

Revenue Secretary Sanjay Malhotra stated earlier this month that there are about 1.11 crore disputed tax demands.

(This story has not been edited by Financemonk staff and is published from a syndicated news agency feed – PTI)

Summary Table

Assessment Year Maximum Withdrawal Limit (Rs)
2010-11 25,000
2011-12 to 2015-16 10,000

Related Links

For more information, you can visit the official website of the Income Tax Department.


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