Tax relief: Cap of Rs 1 lakh set for settling minor tax dues
The Income Tax department has established a cap of Rs 1 lakh per taxpayer for the withdrawal of minor tax demands, following the interim budget announcement about withdrawing direct tax demands.
The official order from the Income Tax department outlines the conditions for withdrawing demands, specifically focusing on demands up to the assessment year 2015-16.
Finance Minister Nirmala Sitharaman, in the interim budget for 2024-25, had earlier mentioned that tax demands for the assessment year 2010-11, up to Rs 25,000, and for the assessment years 2011-12 to 2015-16, up to Rs 10,000, would be withdrawn, providing relief to taxpayers.
The order from the tax department specifies that outstanding demands related to income tax, wealth tax, and gift tax as of January 31, 2024, will be canceled.
However, this cancellation is subject to a maximum limit of Rs 1 lakh for any individual taxpayer or assessee, covering the principal tax amount, interest, penalty, fee, cess, and surcharge.
The withdrawal does not apply to demands raised against tax deductors or collectors under the Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) provisions of the Income-tax Act.
According to the recent order, the Central Board of Direct Taxation (CBDT) clarified that the Rs 1 lakh limit encompasses outstanding demand entries in the tax authorities’ records, including the principal tax amount, interest, penalty, fee, cess, or surcharge under the three tax acts.
However, the cancellation of demands does not grant taxpayers the right to claim credits or refunds, and it does not provide immunity from any ongoing, initiated, or anticipated criminal proceedings against the taxpayer.
The CBDT specified that demands within the specified limits, even if eligible for withdrawal, will not be canceled if raised against entities required to deduct or collect tax at source under the Income-tax provisions related to TDS or TCS.