CBDT has issued Order dated 13/02/2024 regarding remission of tax demands of Rs 25,000 up to Ay 2010-11 and Rs 10,000 for AY 2011-12 to 2015-16 aggregating Rs 100,000 as on 31/01/2024, as per Budget 2024 proposals.
This order outlines significant changes regarding outstanding tax demands under the Income-tax Act, 1961, Wealth-tax Act, 1957, and Gift-tax Act, 1958. Here are the key points from the order:
1. Remission and Extinguishment of Tax Demands:
i) The order allows for the remission and extinguishment of outstanding tax demands as of 31st January 2024.
ii) The monetary limits for remission are as follows:
a) Up to AY 2010-11: Each demand entry up to Rs 25,000.
b) AY 2011-12 to 2015-16: Each demand entry up to Rs 10,000.
iii) The maximum ceiling for any specific taxpayer/assessee is Rs 100,000.
iv) This applies to the principal component of tax demand and related interest, penalty, fee, cess, or surcharge.
2. Exclusions:
i) The remission does not apply to demands raised against tax deductors or tax collectors under TDS or TCS provisions of the Income-tax Act, 1961.
ii) Interest calculation for delay in payment is not required for the purpose of determining the ceiling.
3. Tax Liability and Sub-Clause (xviii):
If any tax liability arises due to sub-clause (xviii) of sub-section (24) of section 2 of the Income-tax Act, 1961, it shall also be remitted and extinguished.
4. Implementation and Rectification:
i) The remission will be carried out for each demand entry within the specified monetary limits, starting from the earliest assessment year.
ii) Rectification of implementation mistakes will be handled by the Centralized Processing Centre (CPC), Bengaluru.
5. Limitations and Effects:
i) The remission does not confer rights to claim credit or refunds.
ii) It does not affect criminal proceedings.
iii) No fraction of demand entry is considered for remission.
iv) Audit requirements are waived.
6. CBDT’s Role:
The CBDT will issue directions/clarifications for proper implementation of the order which aims to ease the burden on taxpayers and streamline tax administration.
CBDT Order dated 13/02/2024: Remission of Small Tax Demands as per Budget 2024
1. Consequent upon the Finance Minister’s budget speech vide para 93 under the heading “Tax Proposals” during Union Budget 2024-25 dated 01/02/2024 and with concurrence of the Department of Expenditure accorded on file of even number vide note dated 09/02/2024, sanction of the Competent Authority in terms of Rule 18 of General Financial Rules, 2017 (GFRs) is hereby accorded to remit and extinguish the following claims to revenue, being tax demands under Income-tax Act, 1961 or Wealth-tax Act, 1957 or Gift-tax Act, 1958 (hereinafter referred as, ‘Acts’) which are outstanding as on 31st January, 2024 (as indicated in column 2 below) with effect from the date on which such demands were created/ raised/ modified pertaining to the Assessment Years (as indicated in column 1 below) in respect of taxpayers/ assessees:
| Assessment Years (AYs) to which the entries of outstanding tax demands as on 31st January 2024 pertain | Monetary limit of entries of outstanding tax demands which are to be remitted and extinguished (Rs.) |
| (1) | (2) |
| Upto AY 2010-11 | each demand entry upto Rs 25,000 |
| AY 2011-12 to 2015-16 | each demand entry upto Rs 10,000 |
The remission and extinguishment of above outstanding tax demand shall be subject to the maximum ceiling of Rs 100,000 (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;
(b) Interest, penalty, fee, cess or surcharge under various provisions of the Income-tax Act, 1961 or corresponding provisions, if any, of Wealth-tax Act, 1957 or Gift-tax Act, 1958.
1.2 The above remission and extinguishment of entries of outstanding direct tax demands shall not be applicable on the demands raised against the tax deductors or tax collectors under TDS or TCS provisions of the Income-tax Act, 1961.
2. 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 provisions of Wealth-tax Act, 1957 and Gift-tax Act, 1958 and therefore, the same shall not be considered for the purpose of determining the ceiling of Rs 100,000 (Rupees one lakh).
3. If any tax liability arises against such a taxpayer/assessee, as a result of application of sub-clause (xviii) of sub-section (24) of section 2 of the Income-tax Act, 1961, the same shall also be remitted and extinguished.
4. The above remission and extinguishment of entries of outstanding demand shall be carried out in respect of each demand entry falling within monetary limit as specified at para-1 above starting from the earliest assessment year to subsequent assessment year(s), subject to the condition that aggregate value of such demand entries shall not exceed the maximum ceiling of Rs 100,000 (Rupees one lakh) for any specific taxpayer/assessee.
4.2 Further, in order to compute the aforesaid maximum ceiling of Rs 100,000 (Rupees one lakh), any demand entry having value more than the aforesaid monetary limits as specified in para-1 above shall not be taken into calculation.
4.3 Under no circumstance, fraction of any demand entry, whether its value is falling within the monetary limit as specified in para-1 above or not, shall be considered for remission and extinguishment to compute the aforesaid maximum ceiling of Rs 100,000 (Rupees one lakh).
5. The aforementioned remission and extinguishment of entries of outstanding demand shall not: –
(i) confer any right to claim credit of any of the remitted and extinguished demand by the taxpayer/assessee under Income-tax Act, 1961 or Wealth-tax Act, 1957 or Gift-tax Act, 1958 or any other law, where such benefit of remission and extinguishment has been allowed to such taxpayer/assessee, or
(ii) confer any right to claim refund of any sum by any taxpayer/assessee under Income-tax Act, 1961 or Wealth-tax Act, 1957 or Gift-tax Act, 1958 or any other law, or
(iii) have any effect on any criminal proceeding(s) pending/initiated or contemplated against the taxpayer/assessee under any Act or law and shall not be construed as conferring any benefit, concession or immunity to the taxpayer/assessee in any such proceedings under any Act or law other than as specifically provided in this order, where such benefit of remission and extinguishment has been allowed to such taxpayer/assessee.
6. As per the provisions of Rule 19(1) of General Financial Rules, 2017, the above remission and extinguishment of entries of outstanding tax demand under the aforesaid ‘Acts’ shall not have the requirement of audit.
7.1 This order shall be implemented by the Directorate of Income-tax (Systems)/ Centralized Processing Centre, Bengaluru (CPC), preferably within two months.
7.2 Rectification of any apparent mistake related to the implementation of this order, which may come to the notice shall be carried out by the CPC, Bengaluru and such rectification shall be considered to be the execution of this order.
8. The Central Board of Direct Taxes (CBDT)/ Member (In-charge of Systems and Faceless Scheme), CBDT shall issue directions/clarifications for any incidental actions required for proper implementation of this order. [F. No. 375/02/2023 IT Budget]
The Income Tax Department has the authority to waive tax demands exceeding Rs 1 lakh in certain situations even though the CBDT has set the maximum limit for waiving eligible income tax demands at Rs 1 lakh. In it’s order CBDT has clarified that future interest would not be included when calculating the total amount of income tax demand for waiver consideration. According to the order, once the outstanding demand is remitted and extinguished, there will be no need to calculate interest for late payment under section 220(2) of the Income-tax Act, 1961, or corresponding provisions of the Wealth-tax Act, 1957, and Gift-tax Act, 1958. This exclusion of interest will not be factored in when determining the Rs 1 lakh ceiling for waiver eligibility.
This waiver scheme supports modest taxpayers to settle their long-standing tax liabilities. Moreover, the exemption from interest is particularly beneficial, given its imposition at a rate of 1% per month, which, in some cases, surpasses the actual tax owed over time. Also, the procedure is be finalized within two months, with the Income Tax Department’s CPC facilitating automatic application, eliminating the need for taxpayer intervention. Thanks CBDT!