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The Central Board of Direct Taxes (‘CBDT’) has issued an Order vide F.No.375/02/2023-IT-Budget dated February 13, 2024, announcing the remission and extinguishment of specific outstanding direct tax demands in consonant with the Finance Minister’s Budget speech on February 01, 2024.

Pursuant to the said order, the Department of Expenditure is hereby accorded to remit and extinguish the following claims to revenue, being small tax demands under the Income-tax Act, 1961, Wealth Tax Act, 1957, and Gift Tax Act, 1958 (collectively hereinafter referred as, ‘Acts’) which are outstanding as of January 31, 2024, are indicated as below: –

Assessment Years (A.Y.) for which the outstanding tax demand as of January 31, 2024	Monetary limit of outstanding tax demand entries to be remitted and extinguished (in INR)
Up to A.Y. 2010-11	Each demand entry up to INR 25,000/-
A.Y. 2011-12 to A.Y. 2015-16	Each demand entry up to INR 10,000/-

The outstanding tax demand shall be remitted and extinguished subject to the maximum ceiling of INR 1,00,000 for any specific taxpayer.

In order to compute the maximum ceiling of INR 1,00,000, any demand entry having value for more than the specific monetary limits as mentioned in the aforesaid table shall not be considered. Further, remission and extinguishment of demand entries shall begin from the earliest assessment year to the subsequent assessment year, subject to monetary limits and maximum ceiling for the specific taxpayer.

The following types of demand entries are included to compute the monetary limit outstanding tax demand: –

• The principal component of outstanding tax demand under provisions of the Acts;
• Interest, penalty, fee, cess, or surcharge under the said Acts; and
• Tax liability arising from the invocation of section 2(24)(xviii) of the Income-tax Act, 1961, on account of a subsidy / grant / cash / cash incentive / duty drawback / waiver / concession / reimbursement by the Central or State Government.

The following types of demand entries are excluded to compute the monetary limit outstanding tax demand: –

• Demands raised against the tax deductors or tax collectors under TDS or TCS provisions of the Income-tax Act, 1961; and
• Interest levied on account of delay in payment of demand u/s 220(2) of the Income-tax Act, 1961 and corresponding provisions of other Acts referred above.

The remission and extinguishment of demand entries shall not have to confer: –

• Any right of the assessee to claim credit of any of the remitted and extinguished demand under the Acts where such benefit is allowed to such taxpayer;
• Any right to claim a refund of any sum by any taxpayer under the Acts or any other law and
• Any criminal proceedings pending, initiated, or contemplated against the assessee will also not be construed as conferring any right to claim immunity under any law.

The Centralized Processing Centre (‘CPC’) can rectify any apparent mistake in implementing this order. The order shall be implemented by the Directorate of Income-tax, CPC, within two months.

KNAV Comments:

1. This scheme has been introduced to alleviate the long outstanding and unresolved demands on the taxpayers. The announcement is a good step towards reducing needless tax litigation and will likely benefit over a crore taxpayers.
2. It will reduce the anxiety of honest taxpayers and avoid hindrance of refunds in subsequent years.
3. Limiting the execution time to 2 months shows the proactive move of the Central Government and CBDT to provide relief to honest taxpayers.
4. Capping the remission and extinguishment limit to INR 1 lakh depicts an effort to address smaller demands and extend relief to a wider spectrum of taxpayers.