The Central Board of Direct Taxes (CBDT) set the outstanding tax waiver limit at Rs 1 lakh in a notification on February 19, 2024, aligning with the announcements made by Union Financial Minister Nirmala Sitharaman in the interim budget for FY2024-25.

In her budget speech on February 1, the minister proposed relief for taxpayers stuck in tax disputes, some dating back to 50 years. She offered to withdraw tax demands up to Rs 25,000 for cases until FY2009-10 and Rs 10,000 for cases between FY2010-11 and FY2014-15.  The minister said around Rs 3,500 crore in outstanding tax demands will be withdrawn to help resolve the backlog spending with the department and remove the burden of honest taxpayers.

There are currently around 1.11 crore disputed tax demands. As per the notification, no audit requirement will be necessary for the “remission of entries of outstanding tax demand” under the General Financial Rules, 2017. The order is expected to be implemented within two months.

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How Will It Apply?

Hitesh Jain, Associate Partner, N.A. Shah Associates, says, “The waiver is applicable for all outstanding demands as of 31st January 2024 and not for demands raised after that.”

According to the order, the outstanding demands for remission should pertain to income, wealth, and gift tax. The upper ceiling of Rs 1 lakh for remission includes tax demand, interest, penalty if any, and cess and surcharge.

Kavita Rani, Partner, Gupta Jalan & Associates, adds, “Rs 1 lakh is only the ceiling, but there is per demand entry capping for eligibility, that is, ‘⁠up to the assessment year 2010-11, it will be up to Rs 25,000, and from AY2011-12 to AY2015-16, it will be up to Rs 10,000. So, if there are more entries, the total will not exceed Rs 1 lakh.”

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Exclusions:

The tax waiver limit will not be applied to tax deducted at source (TDS) and tax collected at source (TCS). Further, it will not apply to anyone involved in criminal legal proceedings.

Jain says, “The waiver will be automatically applied by the Income Tax Department’s Central Processing Cell (CPC) without any intervention by the taxpayer. The process is likely to be completed within two months. So, it is advisable to keep track of the existing demands and compare once they are waived.”

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How To Check The Status?

If you or any of your family members have received a tax demand pertaining to any financial year up to FY 2014-15, and if not in the excluded category, would be the beneficiary of this tax waiver. A taxpayer can check pending tax status on the official income tax portal by following these steps:

Step 1: Visit the income tax portal https://www.incometax.gov.in/iec/foportal/

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

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

Step 4: It will show the data. In case of no outstanding demand, it will show the message ‘No records of outstanding demand found’.

In case of any doubt, one call the toll-free numbers 18003090130 or 180020335435.