Budget 2024: Waiver of tax demands to give relief to 10 million small taxpayers

While acknowledging the difficulties faced by assesses and in order to improve ease of doing business and also to improve the taxpayer services, the Hon’ble Finance Minister, in her interim budget speech, announced for the waiver of outstanding old tax demands upto an amount of Rs. 25,000 till fiscal year 2009-2010 and upto Rs. 10,000 from fiscal years 2010-2011 to 2014-2015.This is expected to give relief to 10 million taxpayers.

At one hand, where India is witnessing significant increase in the number of tax payers, with number of return filers swelling to 2.4 times, it was the need of the hour to bring in such initiative to help deal with some backlog.

The assesses were grappling with this issue of long outstanding demands, especially in cases where the demands pertain to very old cases and there are neither records nor resources available, to resolve the same. This was contributing to huge pile up of disputed tax demands and also hindering the process of smooth processing and issuance of refunds to honest taxpayers.  

This initiative will provide relief to a large number of assesses and also ease tax officers burden in chasing for such petty demands. It may be noted that the precise scheme giving effect to the above mentioned announcement will be framed by Central Board of Direct Taxes (CBDT) by way of a circular, subsequently. However, there are few issues, which should be kept in mind, while framing the guidelines for such tax waiver scheme:

With this announcement, the following issues might also arise:

• Does the waiver apply where the original tax demand was more than Rs. 25000 / 10000 and the assessee had made partial payment and the current outstanding tax demand is less than Rs. 25,000 /Rs. 10,000?;
• Does the tax demand necessarily be disputed?;
• What will happen to previous refunds which have been adjusted against such demands ?;
•Does the monetary limit of Rs. 25,000 / 10,000 will include interest?

Though the announcement has been made by the Finance Minister in her Budget Speech, we would need to wait for CBDT circular for fine prints to analyse the same. We hope these issues gets addressed in the finer prints. Though this is a small relief but a great step towards creating a conducive tax environment which encourages ease of doing business and compliances in India.

(Rupali Singhania and Shilpa Bansal are co-founders of Areete Consultants LLP. The views of the authors are personal)

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