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Remission and extinguishment of small income-tax demands will not entail any credit or refund, Central Board of Direct Taxes (CBDT) has said. It simultaneously said that such a scheme will not result in immunity from prosecution. The scheme aims to benefit over 1 crore assessees.
The remission scheme had been announced in the Interim Budget. Subsequently, CBDT has issued an order to implement the scheme, preferably within two months. Finance Minister Nirmala Sitharaman had talked about a large number of petty, non-verified, non-reconciled or disputed direct tax demands, many of them dating as far back as the year 1962, which continue to remain on the books causing anxiety to honest taxpayers and hindering refunds of subsequent years.
“I propose to withdraw such outstanding direct tax demands up to ₹25,000 pertaining to the period up to financial year 2009-10 and up to ₹10,000 for financial years 2010-11 to 2014-15. This is expected to benefit about a crore taxpayer,” she said.
Now, an order issued by CBDT said that these demand of shall be remitted or extinguished subject to maximum limit of ₹1 lakh for any taxpayer. The order covers demand entries pertaining to Wealth Tax Act, Gift Tax Act apart from Income Tax Act and will also include interest, fee, penalty, surcharge and cess under the said three statutes.
The remission or extinguishment is not applicable on TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) demands but the tax liability arising from invocation of section related with subsidy or grant) is covered. It has also been said that the order also clarifies that the remission or extinguishment shall not confer any right to claim any credit or refund.
“The remission or extinguishment shall not have any effect on criminal proceedings pending, initiated or contemplated against the assessee under any Act or law and shall not construed as conferring any benefit, concession or immunity to the taxpayer/assessee in such proceedings under any Act or law other that as specifically provided in the order,” the order said.
Experts’ take
Commenting on the order, Maneesh Bawa, Partner with Nangia Andersen India, said: “Following this directive, outstanding direct tax demands that meet the eligibility criteria will be waived and cancelled. Taxpayers are advised to access their online accounts and navigate to Pending Action > Response to Outstanding Demand to verify the status of ‘Extinguished Demands’ related to them>.”
Sandeep Sehgal, Partner- Tax, AKM Global, termed this scheme as a significant initiative poised to alleviate the long-standing burden of unresolved demands on the taxpayers and limiting the execution time to 2 months showcase the proactive move of the Indian authorities aimed at helping taxpayers.
Further, capping the remission limit to ₹1 lakh signifies an effort to address smaller demands and extend relief to a wider spectrum of taxpayers. This directive underscores a commitment to facilitating a fair and efficient tax system, providing relief to small taxpayers while upholding compliance and integrity in tax administration. Further, although there is a clarification that there will be no immunity from prosecution, the intent seems to be clear that the focus is on clearing the tax demands to benefit the bonafide taxpayers, he said.
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