Income tax demand of up to Rs 1lakh/person can be withdrawn: IT department

The Income Tax department has begun the process of extinguishment of old outstanding small income tax demand as announced in the Interim Budget 2024. The Central Board of Direct Taxes (CBDT) has set the ceiling at Rs 1 lakh per person for withdrawal of small tax demands till Assessment Year 2015-16.

Tax Withdrawal

The CBDT order said that the outstanding tax demands pertaining to income tax, wealth tax and gift tax as on 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 would include principal component of tax demand, interest, penalty or fee, cess, surcharge.

However, the remission shall not be applicable on the demands raised against the tax deductors or tax collectors under TDS or TCS provisions of the I-T Act.

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Finance Minister Nirmala Sitharaman in the interim budget said that that tax demands for AY 2010-11 of up to Rs 25,000 and for AY 2011-12 to 2015-16 of up to Rs 10,000 will be withdrawn. Tax demands totalling about Rs 3,500 crore will be withdrawn following the announcement.

Nangia Andersen India Partner Maneesh Bawa said the directive further specifies that this waiver or cancellation does not entitle taxpayers to any claims for credit or refunds.

Additionally, the waiver or cancellation will not influence any ongoing, planned, or potential criminal legal proceedings against the taxpayer and does not grant any immunity under any legislation.

"Taxpayers are advised to access their online accounts and navigate to Pending Action > Response to Outstanding Demand to verify the status of 'Extinguished Demands' related to them," Bawa said.

Revenue Secretary Sanjay Malhotra had earlier this month said that there are about 1.11 crore such disputed tax demands