Income Tax: Pending Tax Demand Up To Rs 1 Lakh Waived
Tax Exemption

The Central Board of Direct Taxes (CBDT) has prescribed the outstanding tax waiver limit at Rs 1 lakh through a notification on February 19, 2024.  Earlier, the Union Financial Minister Nirmala Sitharaman had made a related announcement in the Interim Budget 2024-25.

On February 1, 2024, the finance minister put forward relief for taxpayers stuck in tax disputes, a few of these dating back to 50 years. She proposed to withdraw tax demands up to Rs 25,000 for cases until the financial year (FY) 2009-10 and Rs 10,000 for cases between FY2010-11 and FY2014-15.  

She further mentioned that Rs 3,500 crore in outstanding tax demands will be withdrawn to aid in resolving the backlog spending with the Income-Tax (I-T) Department and offer relief to honest taxpayers.

At present, there are about 1.11 crore disputed tax demands. The notification mentions that no audit requirement will be required for the ‘remission of entries of outstanding tax demand’ under the General Financial Rules, 2017. There is anticipation that the order may be implemented within two months.

The waiver is applicable for all outstanding demands as of January 31, 2024. However, it is not for demands raised after this date.

As per the order, the outstanding demands for remission should be related to income, wealth, and gift tax. The limit of Rs 1 lakh for remission includes principal components of tax demand, interest, penalty (if any), and cess and surcharge.

The Rs 1 lakh is only the ceiling, but there is per demand entry capping for eligibility, that is, up to the assessment year (AY) 2010-11, it will be up to Rs 25,000. Similarly, from AY2011-12 to AY2015-16, it will be up to Rs 10,000. However, in case there are more entries, the total will not be more than Rs 1 lakh.

The tax waiver limit does not apply to tax deducted at source (TDS) and tax collected at source (TCS) of the Income-Tax Act (ITA), 1961. In addition, it will not apply in case an individual is involved in criminal legal proceedings.

The tax waiver will be automatically applied by the I-T Department’s Central Processing Cell (CPC) without any intervention by the taxpayer. 

A step-by-step process to check the status

In case an individual or any of their family members have received an income tax demand related to any FY up to FY 2014-15, and if not in the excluded category, would receive this tax waiver benefit. It is possible to check pending tax status on the official income tax portal through the following steps:

Step 1: Go to  the income tax official portal. 

Step 2: Login and go to the ‘Pending Action’ tab at the top of the page.

Step 3: Tap on the ‘Response to Outstanding Demand’ option.

Step 4: This will display the data. In case of no outstanding demand, it will display a message prompt ‘No records of outstanding demand found’.

In case any clarification is needed, reach out to the 24×7 toll-free numbers 1800-309-0130 or 1800-2033-5435

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