CBDT issues order giving effect to the Budget proposal of remitting petty tax demands

This Tax Alert summarizes a recent Order[1] issued by the Central Board of Direct Taxes (CBDT) , on remission or extinguishment of small tax demands outstanding as on 31 January 2024 under the Income Tax Act 1961 (ITA) or Wealth Tax Act, 1957 or Gift Tax Act 1958, (referred as relevant Acts). 

This Order gives effect to the proposal announced by Finance Minister (FM) in her speech for Interim Budget 2024-25, withdrawing direct tax demands up to INR25000 pertaining to the period up to tax year 2009-10 and up to INR10000 for tax years 2010-11 to 2014-15.

The Order, inter-alia, provides conditions/guidelines for withdrawal of outstanding demands as under and it is proposed that the same shall be implemented by Centralized Processing Centre (CPC) preferably within two months:

• Tax demands will include principal amount of tax, interest, surcharge, cess, penalty or fees. 
  
  
• The maximum ceiling limit for remitting the demands qua a taxpayer will be INR100000.
  
  
• Remission/extinguishment of demand will be undertaken in a chronological manner for the tax years and fraction of demand shall be ignored.
  
  
• No interest shall be levied for delay in payment of demands.
  
  
• Demands do not include demands raised under withholding tax or tax collection at source provisions of the ITA. 
  
  
• Withdrawal/remission of tax demands under this Order will not give any right to the taxpayers to claim credit or refund of waived amount and will not grant immunity from any ongoing litigation.

[1] F No. 375/02/2023-IT-Budget, dated 13 February 2024