NEW DELHI: The Income Tax (IT) department will waive off old tax demand up to R1 lakh for any taxpayer under the income tax act or wealth tax act or gift tax act, its notification said.
Finance Minister Nirmala Sitharaman in her interim-budget speech had announced the withdrawal of petty tax demands of R10,000 a year upto assessment year (AY) 2009-10 and each demand of R25,000 during AY 2011-12 and AY 2015-16.
This order shall be implemented by the Directorate of Income Tax(Systems)/Centralised processing centre, preferably within two months.
It is to be noted that the remission and extinguishment of such entries of outstanding direct tax demands shall not be applicable on the demands raised against the tax deductors or tax collectors under TDS or TCS provisions of the income tax act.
Further, in order to compute the aforesaid maximum ceiling of R100,000 for any specific taxpayer or assessee. “Consequent to the aforesaid remission and extinguishment of entries of outstanding demand, there shall not be requirement of calculation of interest on account of delay in payment of demand under sub-section (2) of section 220 of the income tax act, 1961 or corresponding provisions of wealth tax act, 1957 and gift tax act, 1958 and therefore, the same shall not be considered for the purpose of determining the ceiling of R100,000,” the notification said.
Also, if any tax liability arises against such a taxpayer as a result of application of section 24 of section 2 of the IT act, the same shall be remitted and extinguished. Section 24 of the IT act allows homeowners to claim a deduction on their home loan interest. The notification also clarified that if a taxpayer’s outstanding dues are forgiven, they cannot use this as a basis to claim a credit or refund under tax laws.
Additionally, any forgiveness of dues will not impact ongoing or potential criminal cases against the taxpayer.
Forgiveness of dues to not impact ongoing cases
The notification said that any forgiveness of dues will not impact ongoing or potential criminal cases against the taxpayer, and does not automatically provide any special benefits or immunity in those legal proceedings beyond what is stated in the forgiveness order.