24 FAQs on Remission or Extinguishment of Old Small Demands Related to Direct-Tax

1. What is the scheme about?

The government announced a scheme to waive off outstanding direct tax demands up to a certain limit for specific financial years. This aims to simplify tax administration and benefit taxpayers with small, old demands.

2. What is the maximum amount waived off?

The maximum outstanding demand eligible for waiver is ₹1,00,000.

3. How much is waived off for each financial year?

• Demands up to ₹25,000 for the financial year (FY) 2009-10 and earlier.
• Demands up to ₹10,000 for FY 2010-11 to FY 2014-15.

4. What is a “demand entry”?

A demand entry refers to a specific tax demand raised by the government against a taxpayer for a particular financial year.

5. Can the total waiver exceed the limit for a single FY (e.g., more than ₹25,000 for FY 2009-10)?

No. Even if you have multiple demands for a single FY, the total amount waived off will be capped at the specified limit (₹25,000 or ₹10,000).

6. What is the deadline for the scheme?

Only demands outstanding as on March 31, 2024, are eligible for this scheme.

7. Do I need to take any action to avail the benefit?

No. The authorities will automatically identify and remove eligible demands from your tax records.

8. What if I already paid an eligible demand?

Unfortunately, there’s no provision for claiming refunds for demands already paid.

9. Does the waiver amount count as my income?

No. The government clarified that the waived-off amount won’t be considered taxable income under the Income-tax Act.

10. Where can I find more information about the scheme?

You can refer to official government notifications or consult a tax advisor for further details.

11. What is the meaning of demand entry? Whether for a single FY the amount of waiver can be more than Rs.25,000/- or Rs.10,000/-, as the case may be?

Ans. Demand entry means the amount of demand related to one issue/matter for which a notice of demand has been issued. It can be possible that there is more than one demand related to one FY in respect of different matters. In such a case, these demands will be considered separately for the purpose of threshold limit. In the above example, for the FY 1975-76, the total o/s demand is of Rs. 32,000/- in respect of two demand entries, however, the o/s demand per demand entry is less than Rs.25,000/-, hence both are eligible for waiver.

12. Whether there will be requirement of any audit before the remission of such demand?

Ans. The CBDT order stipulates that as per the provisions of Rule 19(1) of General Financial Rules, 2017, the above remission and extinguishment of entries of o/s demand under the Income-tax Act, Gift Tax Act or Wealth-tax Act, as the case may be, shall not have the requirement of audit.

13. In case a demand is related to up to FY 2014-15 but has been raised on or after the FY 2014-15, whether it will be considered for the purpose of waiver?

Ans. The CBDT order describes that the monetary limit is to be considered in respect of the FY for which it relates to, whether it is raised/created or modified later on. Further, such demand should be outstanding as on 31.01.2024. The waiver/remission is with reference to the FY i.e. up to FY 2014-15. In the above example, in S. No. 6, the demand is related to FY 2008-09, i.e., up to FY 2014-15, however, it has been created after FY 2014-15, i.e., FY 2018-19, still it will be eligible for waiver.

14. Whether any random years can be selected for the purpose of waiver off of demand in respect of which demand is o/s?

Ans. In case the total of the eligible demand entry for the various assessment years exceeds overall monetary limit of Rs. 1,00,000, the waiver shall be in respect of those demands starting from earlier assessment years to the subsequent years. As in the above-mentioned example, we have considered the cumulative eligible amount starting from the FY 1975-76 and in the case of FY 2011-12, even though the demand has been created later than the demand for the FY 2013-14, the same has been considered earlier while consider the amount of waiver off.

15. In case, due to a demand entry the overall limit of waiver is crossing the threshold limit of Rs.1,00,000/-, in such a case whether the fraction of the demand entry will be waived off?

Ans. A demand entry can’t be waived off in fraction in any case, whether it is crossing the overall threshold limit or individual limit as a demand entry. In the example, in S. No. 10, the demand entry of Rs.9,000/- is not eligible for waiver as it is crossing the overall threshold limit of Rs. 1,00,000/-.

16. In case of ineligible demand, whether it should be considered for overall threshold limit?

Ans. It has been provided that demand entry which are not eligible for waiver on account of being above the monetary threshold of Rs. 25,000 or 10,000 as the case may be shall not be considered while computing the said overall monetary ceiling for of Rs. 1,00,000.

17. What is the nature of demand which is eligible for waiver? Whether, it includes only tax, further, whether demand related to other direct taxes is also eligible for waiver?

Ans. The waiver shall be in respect of any demand under the Income Tax Act, 1961, Wealth Tax Act, 1957 or the Gift Tax Act, 1958. Further, any demand whether it is principal amount of tax, interest, surcharge, cess, penalty or fee under these enactments shall be eligible for waiver.

18. Whether the interest for the period after the demand entry has been created will be considered for the purpose of computation of o/s demand?

Ans. No interest will be calculated for the purpose of waiver of o/s demand post the date of demand entry created and the amount as appearing in the demand entry will be considered for the purpose of any threshold limit.

In other words, no interest is to be computed or levied under section 220(2) of the Income Tax Act (or corresponding provision of Wealth Tax Act or Gift Tax Act) in respect of such demands which are eligible for write off. Further, it has also been provided that such interest under section 220(2) being waived shall also not be considered while computing the overall monetary limit of Rs. 1,00,000.

19. Whether the demand related to TDS or TCS provision is also with in the ambit of this order?

Ans. The benefit of waiver will not be available in respect of demand outstanding under TDS or TCS provisions. Hence, such demand shall not be eligible even if the same is below the monetary limit of Rs. 25,000 or 10,000 as the case may be.

20. Whether the benefit of waiver or remission of demand can be considered as income of the assessee?

Ans. It has been specifically provided in the CBDT order that there will be no tax obligation on such waiver or remission of demand and this will not be considered as income u/s 2(24)(xviii) of the Income-tax Act, 1961. Thus, waiver of tax in pursuance of the CBDT Order shall not be treated as income of the taxpayer.

21. Whether the taxpayer can be eligible for any credit or refund of tax on the basis of the waiver off of eligible demand?

Ans. It has been clarified in the CBDT order that on the basis of such waiver, the taxpayer shall not be eligible to claim any credit in respect of such demand being written off nor shall be eligible to claim any refund.

22. Whether such waiver of demand can impact any criminal proceedings which are pending or initiated in respect of the matter related to such waived off demand?

Ans. It has been clarified that the waiver shall not have any effect on any criminal proceedings that are pending or initiated or contemplated against the taxpayer under any Act or law.

23. How much time will be taken by the government to implement this scheme/order? Further, while implementing this order, in case, there will be any mistake, how it will be rectified?

Ans. This order shall be implemented by the Directorate of Income-tax (Systems)/Centralized Processing Centre, Bengaluru (CPC), preferably with in 2 months.

24. In case, there is any mistake while implementing this order, whether the same is rectifiable? If yes, how?

Ans. Rectification of any apparent mistake related to the implementation of this order, which may come to the notice shall be carried out by the CPC, Bengaluru and such rectification shall be considered to be the execution of this order.