Indian Government waives tax demands up to Rs 1 lakh, providing relief to taxpayers

Indian taxpayers with lingering doubts can finally breathe a sigh of relief as the Central Board of Direct Taxes (CBDT) has initiated a taxpayer-friendly move, extinguishing eligible outstanding direct tax demands up to Rs 1 lakh per individual.

As per theorderissued on February 13, 2024, the process to remit and extinguish qualifies foroutstanding tax demands as of January 31, 2024.

This initiative, outlined in the 2024 Interim Budget, aims to clear the books for millions and streamline the tax ecosystem.

Wiping the slate clean

This move targets a significant chunk of taxpayers burdened by "petty, non-verified, non-reconciled or disputed" demands dating back to 1962.

These demands, often stemming from the Income-tax Act1961, Wealth-tax Act1957, and Gift-tax Act 1958, have caused undue anxiety and hindered refunds for many.

How much relief?

The remission varies based on assessment years:

• Assessment years 2010-11 onwards:Up to Rs 25,000 per demand entry.
• Assessment years 2011-12 to 2015-16:Up to Rs10,000 per demand entry.

Importantly, an overall cap of Rs 1 lakh per taxpayer exists, excluding demands related to tax deducted at source (TDS) or tax credited at source (TCS).

Not everyone gets a free pass

While offering widespread relief, the initiative excludes demands against tax deductors/collectors under TDS/TCS provisions and any ongoing criminal proceedings against taxpayers.

Interest no more a burden

In a welcome move, the order eliminates the need to calculate interest on delayed payments for extinguished demands. This further eases the financial burden on relieved taxpayers.

Checking your status

Taxpayers can easily verify their extinguished demands by logging into the income tax portal and navigating to "Pending Action > Response to Outstanding Demand".