CBDT Releases Order to Waive off Tax Demand Outstanding as of Jan 31, 2024; Capped at Rs. 1 Lakh per Assessee

Order, F.no. 375/02/2023, dated 13-02-2024

In the Union Budget 2024 speech, Finance Minister Nirmala Sitharaman announced the extinguishment of the tax demands until Assessment Year 2015-16. Subsequent to the speech, the Central Board of Direct Taxes (CBDT) has released an order to remit and extinguish the tax demands under the Income Tax Act, 1961, Wealth Tax Act, 1957 or Gift Tax Act, 1958 [“Acts”].

The order outlines various aspects of extinguishing the demands of different assessment years. It prescribes the monetary limit for outstanding tax demands and the maximum ceiling limit eligible for waiver for the assessee. The board has prescribed that demands which are outstanding as of Jan 31, 2024, shall be eligible for waiver. The following are the key takeaways from the order.

a) Monetary limit for waiver of demand

Until AY 2010-11, demands up to Rs. 25,000 per entry are eligible for the waiver, whereas from AY 2011-12 to AY 2015-16, the waiver applies to demands entry up to Rs. 10,000.

b) Maximum ceiling of Rs. 1 lakh

Remission and extinguishment of eligible demands are capped at Rs. 1,00,000 per assessee, regardless of the total eligible amount across assessment years.

c) No waiver for TDS/TCS demands

The CBDT specifies that waiver of demand doesn’t apply to the demands raised against the tax deductors or collectors under the TDS or TCS provisions of the Income Tax Act, 1961. Thus, the outstanding demand for eligible assessment years will be exclusive of the demands arising from TDS/TCS provisions.

d) Tax demand includes principal component of tax and any other interest

The outstanding demand comprises the tax principal under the Act plus interest, penalty, fees, cess, or surcharge as per Act provisions, with the ceiling limit as applicable.

e) Interest on account of delayed payment not to be considered

It’s clarified that interest under section 220(2) isn’t applicable for calculating the demand entry amount or the ceiling limit of Rs. 25,000, Rs. 10,000, or Rs. 1,00,000, respectively.

f) No right to claim credit or refund

It’s clarified that remission of outstanding demands doesn’t grant the assessee the right to claim credit or refund under the Income Tax Act or any other legislation.

g) No effect on criminal proceedings

Waiver of demand won’t impact ongoing or completed criminal proceedings against the assessee and doesn’t provide any benefit, concession, or immunity under such proceedings.

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