Petty, old outstanding tax demands not withdrawn? Know what to do next | Simply Save

The income tax (I-T) department has recently enabled a facility on its portal incometax.gov.in for tax-payers with long-standing disputes over petty tax demands to find out if these have been withdrawn or not.

This follows Finance Minister Nirmala Sitharaman’s interim Budget 2024 announcement to withdraw petty tax demands dating back to the 1960s in some cases. Put simply, I-T is set to withdraw two categories of outstanding demands—the ones entailing amounts of less than Rs 25,000 dating to the years before 2009-10 as also demands amounting to less than Rs 10,000-demands pertaining to the financial years between 2010-11 and 2014-15. The overall limit per tax-payer is set at Rs 1 lakh.

Now, tax-payers who had been grappling with such outstanding demands can access the information on the waiver through the ITR portal. However, several doubts continue to persist. For instance, what is the recourse of tax-payers whose refunds due have already been adjusted against outstanding demands? What if a tax-payer feels the tax demand against her is eligible for waiver, but it is not extinguished by the tax department?

Also read: Will FM's talk of small tax demands really make a big difference?

Moneycontrol’s Preeti Kulkarni spoke to Tapati Ghose, Partner, Deloitte India to understand the nitty-gritties of the process and the way forward for tax-payers who may find that the demands continue to be outstanding even after two months.

Here are the key takeaways from the discussion:

-              A significant number of petty, unverified, unreconciled and disputed direct tax demands dating back to 1962 in some cases remain outstanding.

-              All such older, petty tax demands of up to Rs 25,000 pertaining to years before 2009-10 and demands of up to Rs 10,000 linked to the period between 2010-11 and 2014-15 are set to be withdrawn. This apart, there is an overall, consolidated threshold of Rs 1 lakh per tax-payer, as the Central Board of Direct Taxes (CBDT) order.

-              The process, which has just started, will give relief to over 1 crore tax-payers, as per Finance Minister Nirmala Sitharaman’s statement.

-              These demands pertain to the Income Tax Act, 1962, the erstwhile Wealth Tax Act, 1957 and Gift Tax Act, 1958. For computing the tax demand’s eligibility for waiver, interest, penalty, surcharge and cess will also be taken into account.

Also read: Govt to give up on Rs 3,500 crore-worth disputed direct tax demands: Revenue Secretary

-              To view the status of your tax demands, you need to log into the I-T portal (incometax.gov.in), click on ‘Pending Action’ tab and then ‘Response to Outstanding Tax demand’ tab.

-              In some cases, demands have already been extinguished, it will be stated upfront. If not, you can wait for a while for the implementation of the process to be complete.

-              The I-T department’s central processing centre has two months to complete the implementation. If, after two months, your eligible outstanding demand is not withdrawn, you can file a grievance with the CPC with a copy of the CBDT order.

-              This will be resolved either by the CPC itself or the jurisdictional assessing officer. Clarity on these aspects will emerge in the days to come.

-              Some tax-payers would have already made partial payments with respect to the outstanding demands and in other cases, tax refund due to them would have been adjusted against such demands. Some tax-payers seem to think this is a grey area.

-              However, there is clarity on this front. The CBDT order starts by saying that the outstanding demand will be considered – this would mean the amount after adjustment of part payment or refund, if any.