Taxpayers, check ITR portal NOW: Pending tax demand up to Rs 1 lakh per individual waived by govt However a maximum ceiling limit per taxpayer/assessee has been set and no outstanding tax demand entries above this ceiling limit would be extinguished
There is good news for those taxpayers who had outstanding direct tax demand up to a specified limit. The Central Board of Direct Taxes (CBDT) via an order dated February 13, 2024, stated that the tax department has started remitting and extinguishing eligible old tax demands which were outstanding as of January 31, 2024."Consequent to the Order of the CBDT in F.No 375/02/2023-IT-Budget dated 13.2.2024 eligible outstanding direct tax demands have been remitted and extinguished. Please log into your account and follow the path Pending Action > Response to Outstanding Demand to check the status of 'Extinguished Demands' in your case," said CBDT in the order dated February 13, 2024, published on February 19, 2024.
What is the ceiling limit of tax demand for individuals?
According to the order of CBDT: The remission and extinguishment of tax demand shall be subject to the maximum ceiling of Rs 1,00,000 (Rupees one lakh) for any specific taxpayer/assessee for the following types of demand entries:a) Principal component of tax demand under the Income-tax Act, 1961 or corresponding provisions of Wealth-tax Act, 1957 or Gift-tax Act, 1958 and .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:10px;font-weight:500;line-height:18px;} #sr_widget .sr_desc{margin:0 auto 0;} #sr_widget .sr_desc{color: #024d99;}
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b) Interest, penalty, fee, cess, or surcharge under various provisions of the Income-tax Act, 1961, or corresponding provisions, if any, of the Wealth-tax Act, 1957, or Gift-tax Act, 1958.
CBDT said in the order, "Consequent to the aforesaid remission and extinguishment of entries of outstanding demand, there shall not be requirement of calculation of interest on account of delay in payment of demand under sub-section (2) of section 220 of the Income-tax Act, 1961 or corresponding provision of Wealth-tax Act, 1957 and Gift-tax Act, 1958 and therefore the same shall not be considered for determining the ceiling of Rs 1,00,000."
"It is clarified that there shall not be requirement of calculation of interest on account of delay in payment of demand under section 220(2). This is a huge relief as Interest under section 220 (2) is levied at a rate of 1% Per month or part of the month which sometimes exceeded the principal tax amount over a period of time," says chartered accountant Ashish Niraj, Founding Partner, A S N & Company, a CA firm.
As far as old demands are concerned there are different thresholds for remission and extinguishment for various cut-off dates in the past. "All outstanding petty income tax demands as of January 31, 2024, up to Rs 25,000 from the inception of the statute till FY 2009-10 and up to Rs 10,000 from FY 2010-11 to FY 2014-15 have been extinguished. The status of the same is reflected clearly on the income tax portal under the tab 'Response to outstanding demand'," says chartered accountant Aastha Gupta, partner, S.K Gulati, and associates, a CA firm.
Direct tax demand up to Rs 1 lakh being foregone by CBDT, log into the ITR portal to confirm the good newsSource: CA Aastha GuptaHow will the maximum ceiling limit of tax demand be calculated?
CBDT said in the order:The remission and extinguishment of entries of outstanding tax demand will be carried out in respect of each demand entry falling within the specified monetary limit, starting from the earliest assessment year to subsequent assessment year(s) subject to the condition that the aggregate value of such demand entries shall not exceed Rs 1 lakh for any specific taxpayer.To compute the maximum ceiling of Rs 1 lakh any tax demand entry having value more than the specified monetary limit shall not be taken into calculation.Under no circumstances, a fraction of any demand entry, whether its value falls within the specified monetary limit above or not, shall be considered for remission and extinguishment to compute the maximum ceiling of Rs 1 lakh.Here's a table showing the specified monetary limit of outstanding tax demand
Assessment years to which the entries of outstanding tax demands as on January 31, 2024, pertainMonetary limit of entries of outstanding tax demands which are to be remitted and extinguishedUp to AY 2010-11Each tax demand entry up to Rs 25,000AY 2011-12 to A.Y 2015-16Each tax demand entry up to Rs 10,000Source: CBDT order
What Interim Budget 2024 says about outstanding tax demand
Finance Minister Nirmala Sitharaman said in the Interim Budget 2024, "There are a large number of petty, non-verified, non-reconciled or disputed direct tax demands, many of them dating as far back as the year 1962, which continue to remain on the books, causing anxiety to honest taxpayers and hindering refunds of subsequent years. This is expected to benefit about a crore taxpayer."This story originally appeared on: India Times - Author:Faqs of Insurances
