Jigar M. Patel
International Tax Attorney
In a first of its kind in the history of India’s Direct Taxes, the Finance Minister Smt. Nirmala Sitharaman in her Interim Budget 2024-25, made an announcement for waiver of tax demands meeting certain criteria and pertaining to periods up to FY 2014-15. The objective behind this move was to improve tax payer services and provide ease of living and doing business, since some of these tax demands even dated back to early 1960s and 1970s. In her budgetary speech, the FM mentioned that her proposal would benefit nearly 1 crore tax payers. Pursuant to the same, the Central Board of Direct Taxes (CBDT) recently issued an Order dtd. 13-02-2024 giving effect to this budgetary proposal of the FM.
Eligibility for Waiver of Demand
As per the CBDT Order, outstanding tax demands as on 31st January, 2024 under the Income-tax Act, Gift Tax Act or Wealth Tax Act, up to Rs.25,000 pertaining to the period up to FY 2009-10 and up to Rs.10,000 for FYs 2010-11 to 2014-15 shall be covered as part of this waiver. Outstanding tax demand shall include not only tax but also interest, penalty, fee, cess or surcharge.
The CBDT has clarified that such waiver or remission shall not apply to the demands made against tax deductors or collectors under the TDS or TCS provisions of the Income-tax Act.
Tax Demands up to aggregate of Rs.1 lakh Waived
It is pertinent to note that the remission of the above outstanding tax demands for a particular taxpayer shall not exceed the maximum ceiling of Rs.1 lakh, regardless of the total eligible tax demand across all assessment years.
It has also been clarified that for the above purposes, there shall be no requirement of calculation of interest u/s. 220(2) of the Income-tax Act or corresponding provisions of the Wealth-tax or Gift-tax Acts and therefore, the same shall not be considered for the purpose of determining the ceiling of Rs.1 lakh.
The waiver will be automatically applied by the Income Tax Department’s Central Processing Cell (CPC) without any intervention required by the taxpayer. The process is expected to be completed within two months. Taxpayers can conveniently check the status of their waived demands by logging into the income tax portal.
Order of Waiving off of Demands
The remission and extinguishment of the entries of eligible outstanding demand shall be carried out starting from the earliest assessment year. Further in order to compute the aforesaid maximum ceiling of Rs.1 lakh, any demand entry having value more than the aforesaid monetary limit of Rs.25,000/Rs.10,000 shall not be taken into calculation. Moreover, fraction of any eligible demand entry shall not be considered in the computation of the ceiling limit of Rs.1 lakh.
Illustration: Sharma has the following outstanding demands and wishes to know the eligibility of availing the benefit of waiver in the light of the above:
| Assessment Year | Outstanding Tax Demand | Whether Eligible for Waiver | Cumulative Eligible Demand | Reasons for Non-Eligibility |
| AY 2004-05 | Rs.22,000 | Yes | Rs.22,000 | NA |
| AY 2005-06 | Rs.24,000 | Yes | Rs.46,000 | NA |
| AY 2008-09 | Rs.28,000 | No | Rs.46,000 | Demand exceeds Rs.25,000 |
| AY 2009-10 | Rs.23,000 | Yes | Rs.69,000 | NA |
| AY 2010-11 | Rs.25,000 | Yes | Rs.94,000 | NA |
| AY 2011-12 | Rs.13,000 | No | Rs.94,000 | Demand exceeds Rs.10,000 |
| AY 2012-13 | Rs.9,000 | No | Rs.94,000 | Inclusion of whole Demand would result in crossing maximum limit of Rs.1 lakh and fraction not permitted |
