IT department to allow payment of tax assessment demands in instalments

The income tax department had raised tax demands in the tax assessments for the AY 2017-18 or the FY 2016-17. The cases of tax demands pertain to the period of demonetisation where taxpayers made huge cash deposits with banks. Many taxpayers have filed an appeal against tax assessment before the Commissioner of Income Tax (Appeals). 

Taxpayers are required to pay 20% of the demand within a month of filing an appeal with the CIT(A). There is a liquidity crunch at the end of the taxpayers. Also, the income tax department faces stiff revenue targets. In such cases, the income tax department of Mumbai is allowing certain ‘deserving’ taxpayers to pay the tax demand in instalments.

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The income tax department of Mumbai is allowing the payment of the upfront instalment of ‘20%’ in multiple instalments. The relaxation is upon request from taxpayers considering the merits of the case. 

A taxpayer can make the demand payment in three or five or six instalments. Most cases involve examination of the genuineness of the cash deposits made by the taxpayers. Hence, the department is allowing the relaxation depending on the taxpayer’s case.

As per the tax assessment guidelines issued by the Central Board of Direct Taxes (CBDT), a taxpayer has to pay 20% of the demand immediately after filing an appeal with the CIT(A). The department has allowed the relaxation in payment owing to the overall poor consumer demand and adverse business conditions. 

For any clarifications/feedback on the topic, please contact the writer at sweta.dugar@cleartax.in