Small tax demands up to ₹1 lakh waived, bringing relief for income tax payers

The government has recently announced a scheme to waive off small outstanding income tax demands, setting a ceiling of ₹1 lakh per taxpayer. The scheme aims to provide relief to taxpayers burdened with old outstanding tax demands.

Criteria for waiver

Finance Minister Nirmala Sitharaman had announced during the interim budget that small outstanding direct tax demands of ₹25,000 or less for the period up to FY10, and ₹10,000 or less for the financial years from 2010-11 up to 2014-15, will be waived off. The Central Board of Direct Taxes (CBDT) has released the order specifying the criteria for the waiver.

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Implementation by Directorate of Income Tax (Systems)

The scheme will be implemented by the Directorate of Income Tax (Systems) located in Bengaluru, at the Centralised Processing Centre (CPC). The process is expected to be completed within two months, providing a quick resolution for eligible taxpayers.

Waiver of outstanding tax demands

The waiver of outstanding demands will be effective for any outstanding demands related to income tax, wealth tax, or gift tax as of January 31, 2024. Demands below Rs. 25,000 for the period up to financial year 2009-10, and up to Rs. 10,000 for financial year 2010-11 to financial year 2014-15, will qualify for the waiver. 

This encompasses interest, penalty, and cess, with the complete outstanding demand being waived off if it falls below the specified threshold. The remission will not apply to demands made against tax deductors or collectors under TDS or TCS provisions of the I-T Act.

Also Read: ITR 2024: Income Tax vs TDS. How the two are different?

Limitations and procedure

However, the total waiver is limited to a maximum of Rs. 1,00,000 per taxpayer (PAN). If the aggregate of all outstanding demands exceeds Rs. 1,00,000 for a taxpayer or entity, the waiver will be limited to eligible demands totaling ₹1,00,000 or less, with the remaining demands still applicable. No refunds can be claimed against the demands being waived off.

Automated process

The waiver will be automatically applied by the Income Tax Department's Central Processing Cell without any intervention required by the taxpayer. The process is expected to be completed within two months. Taxpayers can conveniently check the status of their waived demands by logging into the income tax portal and accessing the "Pending Action > Response to Outstanding Demand" section.