Yes, you read it right…!
Hon’ble Finance Minister Smt. Nirmala Sitharaman announced the remission and extinguishment of certain outstanding direct tax demands during her interim budget 2024 speech. Consequently, the Central Board of Direct Taxes (CBDT) issued an Order vide F. No. 375/02/2023-IT-Budget dated February 13, 2024, laying down the guideline & procedure for waiving such outstanding demands.
Objective of the initiative
The government is committed towards rationalizing the tax laws & ease of doing business. This step would involve eliminating numerous small outstanding tax demands which are created due to minor discrepancies. Small tax payer would be benefitted the most due to this initiative. Many petty demands are generated due to minor discrepancies in Return of Income or other petty matters. The government aims to eliminate all insignificant outstanding demands.
Let’s understand the matter
Outstanding tax demand entries under Income-tax Act, 1961 or Wealth- tax Act, 1957 or Gift-tax Act, 1958, which are outstanding as on 31/01/2024 are eligible for remission.
Remission of demand shall be assessment year wise.
Outstanding tax demand upto ₹ 25,000/- for each assessment year upto AY 2010-11 would be remitted.
Outstanding tax demand upto ₹ 10,000/- for each assessment year from AY 2011-12 to AY 2015-16 would be remitted.
However, ceiling limit of cumulative outstanding tax demand remission shall be ₹ 1,00,000/- for an assessee.
Waiver of outstanding tax demand would not be considered as income in the hands of assessee u/s 2(24)(xviii) of Income Tax Act.
The assessee is not required to calculate/pay any interest on remitted tax demand u/s 220(2). Further, such interest shall not be considered while calculating the cumulative threshold of ₹ 1,00,000/-
No remission shall be granted on tax demand generated under TDS / TCS provisions.
Outstanding tax demand entry shall be remitted wholly & no fractional entry shall be waived in case cumulative remission is exceeding the threshold of ₹ 1,00,000/-
Remission shall be made in chronological AY basis. Earliest AY shall be remitted first & only thereafter, the remaining AY if falls within the limits.
Any AY having outstanding tax demand of ₹ 25,000 / ₹ 10,000 (as the case may be) shall not be eligible for remission.
Due to this remission provisions, assessee shall not be entitled to claim any refund of sum or tax credit under Income Tax Act or any other law.
The remission of demand shall neither have any effect on any criminal proceedings initiated, contemplated, pending nor provides any immunity / concession to any assessee under Income Tax Act or any other law.
The procedure of remission of outstanding demand is wholly automatic and assessee is not required to file for any Form / Application. The outstanding tax demand, if any, shall be remitted as per criteria laid down above automatically & shall be reflecting on the income tax portal.
Steps to be followed by the assessee:
Assessee shall login on www.incometax.gov.in
Under the ‘Pending Action’ tab > select ‘Outstanding Demand”
Status of outstanding demand would be shown as “Extinguished Demand”, if eligible & remitted.
In case the assessee is aggrieved by any remission, he may file for a Rectification application to CPC, Bangaluru.
In case, the assessee has any grievances, queries or concerns, he may call on 1800 309 0130 to resolve his queries / concerns or he may also communicate his concerns on taxdemand@cpc.incometax.gov.in
Practical Example
Sr. No | Assessm ent Year | Demand Entry Date | Outstanding Tax Demand | Cumulative Tax Demand | Remarks |
1 | 1991-92 | 31/03/1996 | 19,500 | 19,500 | Entire amount of Rs.19,500 is eligible |
2 |
1994-95 |
31/03/1997 |
30,000 |
19,500 | Since, demand is more than 25,000 in AY, no remission is allowed |
3 | 2001-02 | 20/08/2009 | 24,500 | 44,000 | Entire amount of Rs.24,500 is eligible |
4 | 2002-03 | 27/09/2010 | 16,000 | 60,000 | Entire amount of Rs.16,000 is eligible |
5 | 2009-10 | 25/02/2015 | 20,000 | 80,000 | Entire amount of Rs.20,000 is eligible |
6 | 2010-11 | 27/02/2015 | 33,560 | 80,000 | Since, demand is more than 25,000 in AY, no remission is allowed |
7 | 2011-12 | 04/05/2016 | 9,850 | 89,850 | Entire amount of Rs.9,850 is eligible |
8 |
2012-13 |
16/09/2020 |
16,000 |
89,850 | Since, demand is more than 10,000 in AY, no remission is allowed |
9 | 2013-14 | 08/06/2022 | 9,150 | 99,000 | Entire amount of Rs.9,150 is eligible |
10 | 2014-15 | 21/02/2023 | 5,000 | 99,000 | Since overall limit exceeds Rs.1 lakh, no remission is allowed |
11 |
2015-16 |
14/02/2024 |
500 |
99,000 | No remission is allowed as the demand was not outstanding on 31/01/2024. |
Click this link to read the official notification - https://bit.ly/tcdoc1
DISCLAIMER : The views expressed are strictly of the author. The content of this article is solely for informational purpose. It does not constitute any legal or professional advice. The author does not accept any liability for any loss or damage of any kind arising out of any information in this article nor for any action taken in reliance therefrom.
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